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More pain as debt repayment takes 57pc of tax collections

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Economy

Treasury secretary Henry Rotich.
Treasury secretary Henry Rotich. FILE PHOTO | NMG 

The Treasury spent Sh57 out of every Sh100 it collected in July and August to service debt, underlining the burden of mounting government borrowing on taxpayers.

Debt repayments consumed Sh118.08 billion in the first two months of this financial year that started in July, Treasury statistics show, a jump from Sh35.08 billion recorded in the similar period a year earlier.

That’s an equivalent of 57.66 per cent of the Sh204.79 billion in total tax collections, Treasury secretary Henry Rotich says in the latest report on revenue and exchequer issues.

The spend on debt made up just 18.68 per cent of the Sh187.77 billion tax collections in the corresponding period in the financial year which ended last June, meaning the taxman has raked in Sh17.03 billion more this year.

Debt obligations have, however, shot up this year as semi-concessional and commercial borrowing the Jubilee administration has contracted over the last five years became due.

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This has denied the Treasury cash for other expenditures in a period that saw 32 of the 47 counties receive no funding from the national government.

In the July-August period, the repayments were the second single largest spend after recurrent expenditures such as salaries, allowances and administrative expenses, which gobbled up Sh133.23 billion.

The recurrent expenses were Sh16.52 billion less than the expenditure a year earlier, mirroring the absence of one-off cash demand for General Election.

The repayments, which are a priority, appeared to exert pressure on the exchequer in the two months, eating into other expenditure such as disbursements to the counties.

Mr Rotich says, in the Statement of Actual Revenues and Net Exchequer Issues as at end of August, published last Friday, only of 15 out the 47 counties had received cash from the exchequer in the first two months of this financial year.

The Sh11.69 billion spent on development projects, Sh7.27 billion paid to pensioners and the Sh4.03 billion released to the 15 counties, accounted for a fifth of what was paid to creditors in the two months.

The Treasury plans to spend nearly Sh870.62 billion on debt obligations by end of this fiscal year in June 2019, comprising Sh505.86 billion in domestic obligations and Sh364.66 billion to foreign creditors.

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World Bank pushes G-20 to extend debt relief to 2021

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World Bank Group President David Malpass has urged the Group of 20 rich countries to extend the time frame of the Debt Service Suspension Initiative(DSSI) through the end of 2021, calling it one of the key factors in strengthening global recovery.

“I urge you to extend the time frame of the DSSI through the end of 2021 and commit to giving the initiative as broad a scope as possible,” said Malpass.

He made these remarks at last week’s virtual G20 Finance Ministers and Central Bank Governors Meeting.

The World Bank Chief said the COVID-19 pandemic has triggered the deepest global recession in decades and what may turn out to be one of the most unequal in terms of impact.

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People in developing countries are particularly hard hit by capital outflows, declines in remittances, the collapse of informal labor markets, and social safety nets that are much less robust than in the advanced economies.

For the poorest countries, poverty is rising rapidly, median incomes are falling and growth is deeply negative.

Debt burdens, already unsustainable for many countries, are rising to crisis levels.

“The situation in developing countries is increasingly desperate. Time is short. We need to take action quickly on debt suspension, debt reduction, debt resolution mechanisms and debt transparency,” said Malpass.

ALSO READ:Global Economy Plunges into Worst Recession – World Bank

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Kenya’s Central Bank Drafts New Laws to Regulate Non-Bank Digital Loans

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The Central Bank of Kenya (CBK) will regulate interest rates charged on mobile loans by digital lending platforms if amendments on the Central bank of Kenya Act pass to law. The amendments will require digital lenders to seek approval from CBK before launching new products or changing interest rates on loans among other charges, just like commercial banks.

“The principal objective of this bill is to amend the Central bank of Kenya Act to regulate the conduct of providers of digital financial products and services,” reads a notice on the bill. “CBK will have an obligation of ensuring that there is fair and non-discriminatory marketplace access to credit.”

According to Business Daily, the legislation will also enable the Central Bank to monitor non-performing loans, capping the limit at not twice the amount of the defaulted loan while protecting consumers from predatory lending by digital loan platforms.

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Tighter Reins on Platforms for Mobile Loans

The legislation will boost efforts to protect customers, building upon a previous gazette notice that blocked lenders from blacklisting non-performing loans below Ksh 1000. The CBK also withdrew submissions of unregulated mobile loan platforms into Credit Reference Bureau. The withdrawal came after complaints of misuse over data in the Credit Information Sharing (CIS) System available for lenders.

Last year, Kenya had over 49 platforms providing mobile loans, taking advantage of regulation gaps to charge obscene rates as high as 150% a year. While most platforms allow borrowers to prepay within a month, creditors still pay the full amount plus interest.

Amendments in the CBK Act will help shield consumers from high-interest rates as well as offer transparency on terms of digital loans.

SEE ALSO: Central Bank Unveils Measures to Tame Unregulated Digital Lenders

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Scope Markets Kenya customers to have instant access to global financial markets

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NAIROBI, Kenya, Jul 20 – Clients trading through the Scope Markets Kenya trading platform will get instant access to global financial markets and wider investment options. 

This follows the launch of a new Scope Markets app, available on both the Google PlayStore and IOS Apple Store.

The Scope Markets app offers clients over 500 investment opportunities across global financial markets.

The Scope Markets app has a brand new user interface that is very user friendly, following feedback from customers.

The application offers real-time quotes; newsfeeds; research facilities, and a chat feature which enables a customer to make direct contact with the Customer Service Team during trading days (Monday to Friday).

The platform also offers an enhanced client interface including catering for those who trade at night.

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The client will get instant access to several asset classes in the global financial markets including; Single Stocks CFDs (US, UK, EU) such as Facebook, Amazon, Apple, Netflix and Google, BP, Carrefour;  Indices (Nasdaq, FTSE UK), Metals (Gold, Silver); Currencies (60+ Pairs), Commodities (Oil, Natural Gas).

The launch is part of Scope Markets Kenya strategy of enriching the customer experience while offering clients access to global trading opportunities.

Scope Markets Kenya CEO, Kevin Ng’ang’a observed, “the Sope Markets app is very easy to use especially when executing trades. Customers are at the heart of everything we do. We designed the Scope Markets app with the customer experience in mind as we seek to respond to feedback from our customers.”

He added that enhancing the client experience builds upon the robust trading platform, Meta Trader 5, unveiled in 2019, enabling Scope Markets Kenya to broaden the asset classes available on the trading platform.

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