Treasury Cabinet Secretary John Mbadi is under pressure to reduce Kenya’s debt burden, following demands from the Controller of Budget (COB), Margaret Nyakango. She has urged the National Treasury to lower the country’s debt-to-GDP ratio to 55% by the year 2029.
In a report analyzing the 2025 Medium-Term Debt Management Strategy, the COB emphasized that the Treasury must create a clear plan to achieve this target.
The report highlighted that Kenya’s total public debt, as a percentage of GDP, has been declining gradually, dropping from 71.9% in 2022 to 65.7% by June 2024. According to projections in the 2025 Budget Policy Statement, this ratio is expected to fall further to 52.5% by 2029.
However, Nyakango cautioned that despite this downward trend, Kenya’s debt-to-GDP ratio remains significantly higher than the International Monetary Fund’s (IMF) recommended ceiling of 50% for developing economies. She stressed that managing and reducing public debt should remain a top priority for the government to avoid worsening financial instability.
Kenya’s Rising Debt and Treasury’s Challenge
According to the COB’s review, Kenya’s total public debt stood at Ksh 10.93 trillion as of December 2024. Of this amount, Sh5.06 trillion (46%) was borrowed from external lenders, while Sh5.87 trillion (54%) was sourced from domestic lenders.
The report also revealed that in the first half of the 2024/2025 financial year, Kenya spent a total of Ksh 666.34 billion on public debt repayments. This was a notable increase from the Ksh 597.58 billion spent in the same period of the previous financial year (2023/2024). The rise in debt expenditure was largely attributed to the repayment of domestic loans, specifically treasury bills and bonds. In this category alone, the government paid Ksh 432.83 billion, up from Ksh 355.17 billion in the previous year.
Nyakango emphasized that Parliament should compel the National Treasury to provide a detailed report outlining the steps taken in the 2024/2025 financial year to reduce short-term borrowing. She pointed out that Kenya’s reliance on short-term debt exposes the government to high refinancing risks and increased interest rates, making debt management even more challenging.
Calls for Better Debt Management and Revenue Reforms
To address the issue, the COB has urged the Treasury to implement comprehensive strategies for managing debt more effectively. These strategies should include revenue collection reforms aimed at reducing dependence on borrowing.
Additionally, the report recommended that the Resource Mobilisation Department at the Treasury provide explanations on measures being taken to secure better interest rates on loans and extend the repayment period.
With mounting debt repayments and limited time to make critical financial adjustments, the Treasury is facing increasing pressure to take decisive action.
Failure to implement effective solutions could lead to deeper financial instability, making it harder for Kenya to sustain its economic growth and development.
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