“Treasury Bonds are medium to long term debt instruments, usually longer than one year issued by the government to raise money in local currency.” The Eurobond was a T-Bond floated in the foreign financial market.
The university of Nairobi hosted a public debate on the state of the much publicized Eurobond funds and how they were organised. The aim of the debate was to clarify issues and give answers on the issue of the Eurobond. The debate was organised at Taifa hall, which has been the centre of public solutions and as the University’s vice chancellor( Prof. M. Mbithi) put it ” scientific knowledge is the pillar for a healthy nation”.
Among the debaters was the PS(principal secretary) National treasury Dr. Kamau Thugge whose background is quite impressive, a former Lenana high school alumni, later Colorado college John Hopkins university, university of Maryland (phd), worked at Pennsylvania as a lecturer before working for the IMF for 25 years.
Floating the Eurobond came at an opportune time and a first for the country as it sought to solve a number of issues. These included:
- to diversify funding sources other than domestic borrowing
- to reduce borrowing from the private sector
- to diversify from bilateral sources of funds which normally attract a “catch” to the funds
- to stabilize the exchange rate and contain the weakening shilling
- to maintain low inflation
The government had tried to float the eurond during the 2007/2008 period but it was impossible and unsuccessful. This was NOT due to the post election violence but due to the global economic crisis at the time.By the end of the debate, it was clear that the money got to the treasury. the money being $2billion dollars or 196.9 billion shillings not exactly 250 billion due to the time it was floated and the charges for the process from JP Morgan and Citi bank. Dr. Kamau had assumed that by telling the public, they had sent $999 million to the dollar reserve at the U.S.A federal reserve bank… they( the Kenyans would know what that meant). The panel later made it clear that they are not aware how money is allocated to ministries in the treasury, which is another debate all together.