Kenya’s National Treasury will this month begin mopping up government funds from commercial banks as the initial phase of implementing the Treasury Single Account (TSA) project takes affect after close to 10 years of planning.
The latest move is likely to cause a shake-up in the liquidity position of the banking industry in which government cash constitutes between eight and 10 percent of the total bank deposits. For example, government deposits in commercial banks stood at Ksh435.87 billion ($3 billion), accounting for 8.69 percent of the total bank deposits of Ksh5.01 trillion ($34.55 billion) as at December 31, 2022, according to Central Bank Statistical Bulletin (December 2022).
The deposits (central government and other public sector) consisted of Ksh323.26 billion ($2.22 billion) and Ksh112.6 billion ($776.55 million) in demand deposits and time savings respectively.
Kenya retreats from domestic borrowing to cool interest ratesUnder the latest plan, government ministries, departments and agencies (MDAs) are required to pay off suppliers, contractors and any other payments within 24 hours of receipt of funds from the Exchequer to eliminate idle cash in bank accounts.
Source : Zawya