Treasury Disputes CoB Report, Says Ksh53.6 Billion Bond Interest was Paid on Time

Treasury Disputes CoB Report, Says Ksh53.6 Billion Bond Interest was Paid on Time

The National Treasury has strongly refuted claims that it delayed the payment of KSh53.56 billion in Treasury bond interest, insisting that all obligations were settled promptly and in accordance with established financial procedures.

The dispute follows a report presented by Controller of Budget Margaret Nyakang’o to Parliament on Monday, March 30, which indicated that interest payments due in May and June 2025 were instead settled in July, based on Exchequer records. The findings raised concerns about Kenya’s ability to consistently meet its debt obligations on time.

However, in a detailed response, the Treasury dismissed the report as misleading, maintaining that the payments were made on schedule through alternative liquidity arrangements.

“This characterisation is inaccurate and potentially misleading. While the amounts may have appeared outstanding within the Exchequer reporting framework, the full obligations were duly settled on the due dates as they fell due in May and June 2025 through the government overdraft facility maintained at the Central Bank of Kenya, in line with established cash management and overdraft operating procedures,” the Treasury stated.

According to the Treasury, the overdraft facility at the Central Bank of Kenya serves as a standard financial mechanism that allows the government to bridge temporary cash flow gaps without disrupting critical payments such as debt servicing.

The statement, signed by Director General of Accounting Services Bernard Ndungu, emphasised that the use of such facilities is routine and aligns with global public finance management practices.

Ndungu further argued that any genuine delay in settling bond obligations would have triggered immediate reactions from investors and financial markets, something he said did not occur.

“Had there been any actual delay in the settlement of these obligations, this would have been immediately evident through complaints or claims from bondholders and market participants. No such occurrences were recorded, affirming that all obligations were met in a timely manner,” he explained.

The Treasury’s clarification comes at a time when Kenya’s public debt remains under intense scrutiny from lawmakers and economic analysts. In her presentation, Nyakang’o warned that the country risks slipping deeper into a debt trap, citing what she described as a “vicious cycle of debt accumulation” driven by expensive borrowing and inefficiencies in project implementation.

She revealed that Kenya’s public debt had risen to KSh12.29 trillion as of December 2025, equivalent to 67.8 per cent of Gross Domestic Product (GDP), significantly above the statutory ceiling of 55 per cent.

Additionally, debt servicing costs remain a major concern, with interest payments amounting to KSh464.49 billion—accounting for 54 per cent of total debt service. Analysts warn that such high interest obligations could limit fiscal space for development spending and social services.

Despite these concerns, the Treasury maintained that the government remains fully compliant with its debt repayment schedules, both domestically and internationally.

“Any presentation suggesting delayed settlement does not reflect the true cash management position and risks creating an inaccurate impression of non-compliance, which is not the case. The National Treasury wishes to confirm that the government settles its debt obligations, both domestic and external, strictly by the due dates,” the statement added.

The disagreement highlights broader concerns about transparency and reporting standards in public finance management, particularly regarding how government transactions are recorded and interpreted within official systems.

Economists note that while overdraft facilities are legitimate tools for managing liquidity, clear communication is essential to avoid misinterpretation that could unsettle investors or affect Kenya’s creditworthiness.

As Parliament continues to interrogate the country’s fiscal position, the Treasury is expected to provide further clarification on its cash management strategies, amid growing calls for tighter controls and enhanced accountability in debt management.

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Treasury Disputes CoB Report, Says Ksh53.6 Billion Bond Interest was Paid on Time