Kenya’s public finances are under acute strain, with the country’s fiscal watchdog issuing some of its starkest warnings yet over a debt burden that is well beyond legally permissible limits and shows few signs of slowing.
Appearing before the National Assembly’s Public Debt and Privatisation Committee on Monday, Controller of Budget Dr. Margaret Nyakang’o painted a bleak picture of the country’s fiscal health. As of December 31, 2025, Kenya’s debt portfolio stood at Ksh 12.29 trillion, equivalent to 67.8 per cent of GDP significantly above the statutory debt ceiling of 55 per cent.
The warning extends beyond the figure. The Controller of Budget highlighted Kenya’s heightened vulnerability due to its external debt profile, flagging the risk of default on Ksh 3.32 trillion falling due within the next year.
Domestically, this is equally concerning. Kenya borrowed approximately Ksh 2.8 billion every day from the local market between July and December 2025, raising fears of crowding out private sector credit. In the first half of the financial year, 44 per cent of the Ksh 1.24 trillion in revenue collected was used to service domestic debt alone.
Dr. Nyakang’o warned that the structure of debt repayment itself is deeply problematic. “Half of debt payments are only financial costs rather than debt reduction. The principal figure is not reducing. We are just paying interest,” she told the committee. Interest payments alone reached Ksh 464.49 billion, accounting for 54 per cent of total debt servicing.The debt trap, she argued, is partly self inflicted. “We find ourselves in a debt trap where we sign for loans when we are not ready. Treasury mobilizes funds without ensuring implementers are prepared,” she said, citing stalled projects including Konza Technopolis and Kenya Power initiatives dating to 2017.
Delays in debt payments have also emerged as a concern. The Controller of Budget flagged delayed settlement of Treasury bond interest payments totaling Ksh 53.56 billion, with obligations that fell due between May and June 2025 only settled in mid July delays of up to two months.
Official projections show Kenya’s debt service to revenue ratio staying above 50 per cent over the next three financial years at 73.7 per cent in 2026/27, 68.2 per cent in 2027/28, and 53.3 per cent in 2028/29.
To reverse course, Dr. Nyakang’o recommended a shift toward concessional borrowing, improved debt transparency, and stronger parliamentary oversight reforms whose urgency, she made clear, can no longer be deferred.
