Kenya’s Public Debt Climbs to Record High as Treasury Borrows KSh1.1 Trillion in One Year

Kenya’s national debt has surged to KSh11.7 trillion, marking one of its highest levels yet, after the National Treasury borrowed more than KSh1.1 trillion in the last financial year. Controller of Budget Margaret Nyakang’o revealed the alarming figures in her report to the National Assembly’s Committee on Public Debt and Privatisation.

Nyakang’o told lawmakers that the country’s stock of public debt rose sharply from KSh 10.6 trillion in 2023/24 to KSh 11.7 trillion in 2024/25, largely driven by increasing fiscal deficits and pressure from a weakening shilling.

“Kenya’s total gross public debt stock for 2024/25 is estimated at Sh11.7 trillion (67.8 per cent of GDP)… driven by fiscal deficits and currency depreciation pressures,” she said, noting that ongoing fiscal consolidation may help slow future growth.

Domestic debt remains the largest proportion of Kenya’s debt at KSh6.3 trillion (54%), while external debt accounts for KSh5.4 trillion (46%). Nyakang’o observed that domestic debt has been growing rapidly due to increased dependency on Treasury bonds and bills, while external debt rose after fresh inflows from multilateral sources.

The Controller of Budget warned that debt servicing has become a major strain on government finances. Kenya will spend KSh1.6 trillion this year alone to service public debt, more than 70% of ordinary revenue.

Domestic interest payments lead the burden at KSh699.5 billion, while external debt servicing stands at KSh540.1 billion, comprising KSh332.7 billion in principal repayments and KSh205.3 billion in interest and related charges.

Nyakang’o also flagged growing risks tied to State-Owned Enterprises (SOEs), which continue to rely heavily on government guarantees. Institutions such as Kenya Airways, KenGen, and the Kenya Ports Authority carry substantial guaranteed loans.

The National Government was forced to settle major guaranteed debts this year, including the Kenya Airways loan, highlighting the fiscal risks associated with struggling SOEs.

“Continued dependence on government guarantees increases the likelihood of future calls… posing direct pressure on the Consolidated Fund,” her report warns.

Beyond national debt, counties are also sinking deeper into arrears. The report, signed by Acting CoB Stephen Masha, shows that counties collectively owed KSh183.03 billion in pending bills as of June 30, 2025. Of this, KSh130.80 billion relates to recurrent activities and KSh52.23 billion to development projects.

The County Executive owed KSh177.95 billion, while County Assemblies owed KSh5.07 billion.

Aging unpaid bills paint a worrying picture:

• KSh48.88 billion (27%) are less than a year old
• KSh19.78 billion (11%) are between one and two years
• KSh20.34 billion (11%) are between two and three years
• KSh85.42 billion (45%) are older than three years

The CoB warns that these ballooning pending bills undermine fiscal discipline, stall development projects, delay salaries, and cripple small businesses relying on county payments. Suppliers have increasingly taken counties to court, triggering costly legal battles and eroding public trust.

With both national and county debts rising sharply, Nyakang’o cautions that the mounting financial pressure is weighing down Kenya’s economic stability and choking growth for households and businesses alike.

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