NAIROBI, September 22- The government has said that it is pushing ahead with plans to raise Sh21.5billion from foreign investors despite the ongoing financial down turn in the international market.
Acting Finance Minister John Michuki told reporters Monday that the crisis in the global money market would not stop them from raising the $300million Sovereign Bond this financial year.
“There are measures been taken to restore the balance in the (international market) and so our plans are still on course,” he stressed.
Michuki said the money raised from the international market would go into financing some of the programs outlined in the 2008/2009 financial budget.
The process to float the foreign bond started in October 2007 and the government had hoped to have the money by December 2007.
However the elections and the post poll events saw the country’s ratings downgraded in the first quarter of 2008, which delayed the process further.
Central Bank of Kenya Governor Prof Njuguna Ndungu explained that the Eurobond is an asset class whose returns do not depend on the happenings in the international financial arena.
“If the Eurobond is going to get high returns, then it is immaterial what is happening in the international market,” he added.
In May 2008, the then Finance Minister Amos Kimunya disclosed that they had already identified the transaction advisers who would provide the services.
At the same time, Prof Ndungu underscored that the melt down in the world had not directly affected the emerging markets because the exposures were very indirect.
“The indirect effects are usually reflected in the exchange rates, interest rates and inflation rates deferential,” explained the Governor.
He added that the weakening local currency against the dollar, which on Thursday hit an eight month high of Sh74, had nothing to do with what is happening around the world especially the US.
“This is an indirect effect of demand and supply conditions in the economy once the effects of the Safaricom IPO are adjusting themselves,” Ndungu added.
He advised that what the country should guard itself against the exposure limits particularly in the banking sector and the investment banks to ensure that the security markets do not crash.