by Bukeni Abdullatif
Nairobi, Kenya — June 3, 2025
Kenya’s public debt has surged to an unprecedented KSh 11.36 trillion as of March 2025, raising fresh concerns about the country’s fiscal sustainability and the government’s debt management strategy.
According to the latest figures released by the National Treasury, the ballooning debt includes KSh 6.04 trillion in domestic borrowing and KSh 5.32 trillion in external debt. Notably, the domestic debt crossed the KSh 6 trillion mark for the first time, highlighting the government’s increasing reliance on local financial markets to fund its operations.
The external debt component, equivalent to approximately USD 40.51 billion, includes loans from multilateral lenders such as the World Bank and the IMF, as well as bilateral agreements and commercial loans.
Analysts warn that the debt levels — now equivalent to over 70% of the country’s GDP — are edging closer to unsustainable territory. “Kenya is walking a tightrope,” said financial analyst Grace Ndirangu. “Debt servicing is consuming a significant portion of revenue, leaving less for critical sectors like healthcare, education, and infrastructure.”
The rise in debt comes amid continued public concern over high taxation, ballooning recurrent expenditure, and controversial mega projects. Critics argue that much of the borrowed funds have not translated into meaningful development, while corruption and inefficiencies remain rampant in government spending.
In response, the government has defended its borrowing, citing the need to stimulate economic recovery, finance infrastructure, and meet debt repayment obligations. Treasury officials maintain that reforms under the 2025 Finance Bill will help improve revenue collection and reduce borrowing pressure in the medium term.
However, with rising interest rates, a depreciating shilling, and slow economic growth, experts caution that the room for maneuver is shrinking. International lenders and credit rating agencies are closely monitoring Kenya’s fiscal path, with implications for the country’s borrowing costs and investor confidence.
The Treasury is expected to release a revised debt management strategy later this month, outlining measures to restructure existing obligations and explore concessional financing options.
