Hence, the Central Bank of Kenya opened an account at JP Morgan Chase Bank, New York, which received the net proceeds of the sovereign bond and the money from commercial financing from the country.
It also opened an account at Citibank, New York, which received a total of Sh73.8 billion in tap sales which were net proceeds.
“After the very positive response we got from the first issue of the Eurobond, we went back to look for additional funding. At the time, it came with lower interest rates and we saw it as an opportunity to take advantage of.”
The two issues therefore, totalled to Sh250 billion including money paid in deductions of commissions and account settlements among other charges.
The two accounts could not, however, release any monies without authority.
The Treasury and Central Bank operated the accounts acting as the government’s fiscal agent.
“Treasury then designated two signatories to the account which were Accountant General and Deputy Accountant General,” Thugge said.
The Projects
According to Dr Thugge, the proceeds of the sovereign bond were spent in nine ministries, departments and agencies including the Ministry of Transport and Infrastructure which received Sh14.9 billion in the financial year 2013/2014 and the Ministry of Environment, Water and Natural Resources which received Sh3.8 billion. That financial year, proceeds from the sovereign bond accounted to Sh25 billion.
The following financial year, 2014/2015, recipients of the Eurobond money included Ministry of Energy and Petroleum which received 18.1 billion and the State of Department of Infrastructure which received Sh49.3 billion. In that financial year, proceeds from the Eurobond totalled to Sh171.9 billion.
In total, Sh196.9 billion was used to finance development projects in the two financial years.
Additionally, upon receipt of the money, the government committed Sh53.2 billion to the syndicated loan repayment.
“As you can now understand, it was impossible to have stolen the Eurobond proceeds,” he says.
The financial expert then shed light on the magnitude of impact the Eurobond proceeds had on the country. According to Thugge, the proceeds helped the country attain lower interest rates; it contributed to the build-up of Kenya’s international reserves and brought stability to the Shilling among others.
“The Shilling performed better than when compared to other currencies. As such, it only depreciated less than many other currencies (by 22.1pc) during a period which witnessed an appreciation on the US
