*Today’s News Highlights* ▪ *Treasury raises domestic borrowing by Sh181 billion* The Treasury has adjusted its domestic borrowing costs upwards by Sh180.6 billion to finance its Sh3.973 trillion budgets amidst flagging tax revenues. Projections in the Budget Policy Statement 2025, or BPS 2025, show that net domestic borrowing target is now Sh593.7 billion from Sh413.1 billion, as the government takes advantage of the lower interest rates to ease its financing pressures. Interest rates had risen, with investors lending the government at a high of 18 percent with the Central Bank of Kenya's effort to fight high consumer prices, reducing liquidity in the market. ▪ *CBK raises Sh130 billion from Feb infrastructure bonds* The Central Bank of Kenya (CBK) has raised Sh130 billion for the government from two reopened infrastructure bonds (IFBs) whose auction closed on Wednesday, after investors oversubscribed the offer amid expectations of interest rates coming down in the near term. The reopened IFBs on sale comprised 14-year and 17-year papers which were initially sold in November 2022 and March 2023 respectively. Buyers offered the Central Bank of Kenya (CBK)—the government’s fiscal agent— a total of Sh193.9 billion against a target of Sh70 billion, eyeing the relatively high coupon rates on the papers (compared to prevailing secondary market yields). ▪ *Chaos as USAid contracts, grants in Kenya terminated* The US government has begun issuing notices terminating contracts and grants to programmes it funds through non-governmental organisations (NGOs) in Kenya, marking an escalation from an earlier directive by President Donald Trump freezing billions of dollars in overseas aid support for 90 days. The United States Agency for International Development(USAid) on Wednesday sent termination notices to several top NGOs it funds in Kenya—sparking chaos of job losses and potential lawsuits by service providers, landlords, and contractors who had been tapped by the organisations. ▪ *Kenya targets issuing first Sh65bn sustainability-linked bond by June* Kenya is set to issue its first sustainability-linked bond by June, targeting to diversify financing sources to cover the annual budget deficit. Sustainability bonds proceeds are exclusively used to finance or re-finance projects that improve social and environmental sustainability. The Sh65 billion sustainability-linked bond has been included for the first time under projected changes to the 2024/25 budget which runs to June 30, 2025. Sustainability-linked bonds are securities whose key performance indicator is linked to the issuer’s achievement of climate or broader sustainable development goals (SDGs). ▪ *Imports to raise current account deficit by Sh135bn* Kenya’s current account deficit is expected to widen by $1.04 billion (Sh134.9 billion) in 2025 on higher imports, but will remain below the projected medium-term average of four percent of GDP, the central bank says. The Central Bank of Kenya (CBK) said last week that the deficit was estimated at $ 4.54 billion (Sh587 billion) at the end of 2024, equivalent to 3.7 percent of GDP, but will rise to $5.59 billion (Sh721.9 billion), or 3.8 percent of GDP, by the end of this year. _Courtesy: Business Daily_ https://whatsapp.com/channel/0029VaBcBIRAzNbtD1l1eA1k