The credit rating firm said the issuance of a $2.1 billion (Sh210 billion) Eurobond in May 2019 allowed the government to refinance a maturing $750 million Eurobond and cover some of its deficit financing
for the fiscal year.
The goal of the debt limits in the state constitution "was to ensure that the state's elected officials would act in a fiscally responsible manner -- that they would cut spending or make structural reforms when needed, rather than continually using deficit financing
to 'kick the can down the road' for future generations to resolve," the complaint said.
1.405 trillion will not overcome the resource gap and the estimated budgetary deficit of Rs.3.15 trillion will certainly be filled with deficit financing
by borrowing from banks and printing of more currency.
These included general revenues, expenditure levels, actual deficit and deficit financing
instruments, and approved a number of steps aimed at achieving financial sustainability.
The subcommittee was informed that under the available resources, expenditure for civil administration, pensions, defence and the entire Public Sector Development Programme through deficit financing
was not sustainable.
The proposal is to cap external deficit financing
at 38 percent, while raising domestic borrowing to 62 percent.
The recovery in issuance stems from higher deficit financing
needs amid moderate oil prices, in particular for sovereign issuers in the GCC, higher sukuk refinancing needs especially in Malaysia, and a gradual increase in the share of sukuk in major issuers' fiscal deficit financing
The bonds have been launched to raise funds for the current account deficit financing
, as the gross official foreign currency reserves remained at $8.2 billion only, despite loans from Saudi Arabia and United Arab Emirates.
He said that the projected total revenue for the year 2019 is ?775.231billion, of which ?606.291billion is expected to be generated internally, ?168.940billion is expected from Federal Transfers while a total of ?77.086billion will be sourced through deficit financing
within our medium-term expenditure framework.
This shows that the financing and deficit financing
functions can be managed properly.
Fitch estimates sovereign gross financing needs will total 5.2% of GDP in the remainder of the year, including 1.8% of GDP in deficit financing
and USD1.9 billion (3.3% of GDP) in scheduled debt maturities.
'The country has been moving toward domestic debt in funding its deficit financing
to reduce exchange risks.