The National Treasury has moved to clarify concerns raised in a recent report by the Controller of Budget regarding Treasury Bond interest payments amounting to Ksh53.56 billion for May and June 2025.
In a statement on Tuesday, March 31, Treasury Principal Secretary Chris Kiptoo explained that the National Treasury had fulfilled all its debt servicing obligations within the required timelines.
Kiptoo stated that all payments due to bondholders during the period were honored as scheduled, dismissing any suggestion of delayed or missed payments.
"The National Treasury notes statements contained in the recent report by the Controller of Budget regarding the settlement of Treasury Bond interest obligations for May and June 2025, amounting to Ksh53.56 billion, and wishes to provide clarification to ensure accurate public understanding.
"All Treasury Bond interest obligations for the stated period were settled in full and on time, in accordance with the Government's debt servicing schedule," the statement read.
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Kiptoo further explained that the apparent discrepancy in reporting arose from how transactions are reflected within the Exchequer system, noting that the payments were facilitated through existing financial mechanisms.
"While the amounts may have appeared outstanding within the Exchequer reporting framework, they were duly financed and settled through the Government overdraft facility at the Central Bank of Kenya, consistent with established cash and liquidity management practices," the statement added.
According to Kiptoo, the use of the overdraft facility is a routine approach in managing short-term government liquidity needs and does not indicate financial distress or default.
"The utilisation of the overdraft facility is a standard and lawful mechanism for managing short term liquidity within Government operations, as provided for under the applicable legal and institutional framework," the statement explained.
Kiptoo maintained that at no time were the bond payments overdue, adding that there were no complaints from investors or disruptions in the financial markets.
"At no point were these obligations in arrears. Notably, no claims, complaints, or disruptions were recorded from bondholders or market participants, affirming that all payments were effected as they fell due," the statement concluded.
This comes days after the National Treasury ruled out introducing new tax rates in the 2026 Finance Bill.
Speaking on Thursday, March 26, while appearing before the National Assembly’s Committee on Budget and Appropriation, Treasury Cabinet Secretary John Mbadi said the government will focus on improving revenue collection efficiency.
He noted that although the tax base is yet to expand significantly, the Treasury will push the Kenya Revenue Authority (KRA) to adopt fast-moving automation systems in tax collection.
"I want to state that we are not looking at a possibility of increasing tax rates because there is no difference of this year and last year; Kenyans are the same, and the rates are still the same. We are looking at the possibility of expanding the base," he said.
Mbadi pointed out that one of the biggest challenges KRA is facing is that taxpayers have not moved to digital platforms, and the authority still relies on largely manual tax collection systems.
"I know this has been talked about a lot, and the base is not expanding as expected, but we are putting pressure on KRA, and some changes must be seen in terms of revenue collection. Failure to which we must make reforms to adapt to the first moving automation of revenue collection," he added.
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