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Kenya Debt Watch
sheep
#81 Posted : Thursday, December 09, 2010 10:59:36 AM
Rank: Veteran

Joined: 7/24/2008
Posts: 781
What an interesting monologue...
The utimate goal of investing is to buy low sell high;if we re-write this core equation in psychology terms it becomes buy fear sell greed.
Scubidu
#82 Posted : Thursday, December 09, 2010 11:36:26 AM
Rank: Veteran

Joined: 9/4/2009
Posts: 700
Location: Nairobi
@sheep. LOL. Which one of us gets the cuter girl and not velma. Although the geek in me ... luvs the glasses.

@scooby.

As for the currency thing … ur right all the way, it’s for the greater good. On slide 14 of the presentation below CBK made a pretty good argument.

http://www.centralbank.g.../media-presentation.ppt

I agree with you totally on the definitional argument of the debt to gdp ratio. I took the productivity issue from the other angle of comparing GDP constant (revenue) growth to public debt, but u have an excellent point on debt productivity. Thanks for your input.

We’ll have to chat more on this CFC Stanbic Bond ... I had thought their problem was core capital, but maybe there’s something ive missed. I still believe these guys suck ... big.
“We are the middle children of history man, no purpose or place. We have no great war, no great depression. Our great war is a spiritual war, our great depression is our lives!" – Tyler Durden
Scooby
#83 Posted : Thursday, December 09, 2010 7:26:24 PM
Rank: Member

Joined: 9/2/2006
Posts: 121
@ scubidu,I hope the discussion (or monologue as sheep is referring to) in this forum are not about who is right or wrong...that's not my style.

Let me know what your issues/concerns about the CfC Stanbic bond issue. I'll see what I can do from my end.

@ scubidu, sheep...me is not the fair gender, poleni.
sheep
#84 Posted : Thursday, December 09, 2010 8:32:23 PM
Rank: Veteran

Joined: 7/24/2008
Posts: 781
Lol!...Someone's being a smarty ...isn't scubidu an alter ego of scooby?
The utimate goal of investing is to buy low sell high;if we re-write this core equation in psychology terms it becomes buy fear sell greed.
Scubidu
#85 Posted : Friday, December 10, 2010 12:28:32 PM
Rank: Veteran

Joined: 9/4/2009
Posts: 700
Location: Nairobi
@scooby. Don't reactly sheepishly to sheeps jests. It was never about whose wrong or right; i appreciate ur keen insights. As you have put it "me is not the fair gender" either, but going any further than that is just asking for scandal.

@sheep. Scooby is Dr Jekyll :)
“We are the middle children of history man, no purpose or place. We have no great war, no great depression. Our great war is a spiritual war, our great depression is our lives!" – Tyler Durden
Scubidu
#86 Posted : Friday, December 17, 2010 11:20:11 AM
Rank: Veteran

Joined: 9/4/2009
Posts: 700
Location: Nairobi
Excellent articles on BD about the country's ballooning debt. Another article looks at the foreign component of our public debt.

Read more:

http://www.businessdaily.../-/6q4uqgz/-/index.html

http://www.businessdaily...8/-/46sx12z/-/index.html
“We are the middle children of history man, no purpose or place. We have no great war, no great depression. Our great war is a spiritual war, our great depression is our lives!" – Tyler Durden
Scubidu
#87 Posted : Friday, December 31, 2010 11:47:36 AM
Rank: Veteran

Joined: 9/4/2009
Posts: 700
Location: Nairobi
China could raise its cash reserve ratio to new highs in 2011

The central government could raise the ratio of reserves it requires banks to hold against their loans to 23 percent in 2011, as it continues to try to curb inflationary credit growth in the financial system, Lu Zhengwei, chief economist at Industrial Bank, said on Tuesday.

The figure would be the highest reserve requirement ratio ever set by a central bank, Lu said.

Zhang Xiaohui, head of Monetary Department of the People’s Bank of China, the country’s central bank, said in an article earlier this year that the ceiling for a central bank’s reserve requirement ratio is 23.5 percent.


Read more:

http://cnbusinessnews.co...-rise-to-record-high-2/

I think this is the sixth increase over the last year but it's interesting to observe such an event considering Kenya's reserve ratio has never risen above 20.0% even during 1993. In April 1993 Kenya's reserve ratio was raised from 6.0% to 8.0%, then 10.0% (Jul-93), 12.0% (Oct-93), 14.0% (Dec-93), 16.0% (Feb-94), and finally 20.0% (Mar-94). We briefly discussed the effects of raising reserve requirements in post 11 on the thread below.

http://www.wazua.co.ke/f...aspx?g=posts&t=5467

Here’s a blast from the past! An old Daily Nation paper for 24th September 1993 written by a Francis Makokha titled “CBK cash reserve ratio rises to 12 pc”. An excerpt was as follows:

The Central Bank has raised its cash reserve ratio from 10 per cent to 12 per cent – a move that may deal a severe blow to small commercial banks and financial institutions. At the same time, a senior CBK official predicted yesterday that donors would resume quick disbursement aid within two weeks after the return of Finance Minister Musalia Mudavadi from Washington DC where he will be attending scheduled for next week.

Beginning October 21, all commercial banks will be required to keep 12 per cent of their deposits with the CBK. Any bank with excess holdings above the new legal requirement will earn 35 per cent annual interest on the excess funds. Previously, no interest was paid on such funds.

This is the third time that the CBK has adjusted the cash reserve ratio for commercial banks this year as part of its efforts to mop up an estimated Sh25 billion pumped into the economy last year and early this year. The cash reserve ratio was about six per cent, at the beginning of the year and was raised to about eight percent in the middle of the year. Last month, the CBK raised the requirement to 10 per cent.


Click on link below for full article.

http://www.2shared.com/d...VV52CDn/02DN240993.html

This is the article I had alluded to in post 24; the CBK has paid interest on reserves before ... WOW.
“We are the middle children of history man, no purpose or place. We have no great war, no great depression. Our great war is a spiritual war, our great depression is our lives!" – Tyler Durden
Scubidu
#88 Posted : Wednesday, January 12, 2011 4:25:31 PM
Rank: Veteran

Joined: 9/4/2009
Posts: 700
Location: Nairobi
Despite the recent announcement that tax revenues have not met the required targets it's important to point out that the growth of 16% in tax revenue more than offsets the 10% growth in domestic interest payments.

This means the current ratio of 9% for the domestic interest to revenue ratio is more than adequate for debt sustainability (far below the 30% target) and so domestic borrowing in the second half of the year can continue with ease.

But we need to also look at foreign debt which include the debts Central Bank owes World Bank under RAMP. I'll highlight the changes in foreign liabilities on the Central Bank balance sheet below for the 2010/11 fiscal year so far:

Jun 10: 1.0 billion
Jul 10: 3.4 billion
Aug 10: 27.9 billion
Sep 10: 28.8 billion
Oct 10: 30.4 billion

Why would the balances be rising? Perhaps they have insufficient hard currency to pay these bills. It would be interesting to know what the policy on payments are?
“We are the middle children of history man, no purpose or place. We have no great war, no great depression. Our great war is a spiritual war, our great depression is our lives!" – Tyler Durden
Dia
#89 Posted : Thursday, January 13, 2011 11:24:31 AM
Rank: Member

Joined: 3/30/2010
Posts: 176
Pardon my ignorance @Scubidu but isn't there something wrong with a country increasing it's debt at a faster rate than it's income? I get really worried when I see our ministers happily committing generations of Kenyans to debt for benefits which I highly doubt trickle down to the common man.Sad
Scubidu
#90 Posted : Thursday, January 13, 2011 3:46:32 PM
Rank: Veteran

Joined: 9/4/2009
Posts: 700
Location: Nairobi
@Dia. Yup, ur right ... there is a problem with that. The problem is that the expenditure is so huge that they need to borrow (they trap themselves in the cycle). But what gov focusses on is the ability to pay back the interest ... which we seem very capable of doing right now. We have the credit card and can pay the interest, but can delay the principal payments (let sum else handle it later).

But one thing is for sure, the government definately has working capital issues ... it's having trouble funding day-to-day operations. Ive just heard that 91 day treasury auctions will be weekly ... what does that say? They're addicts and our future generation will experience the withdrawal.
“We are the middle children of history man, no purpose or place. We have no great war, no great depression. Our great war is a spiritual war, our great depression is our lives!" – Tyler Durden
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