Kenya’s public debt has surged to Sh11.7 trillion, marking a sharp increase of over Sh1.1 trillion in the 2024/25 financial year, according to a report presented to Parliament by Controller of Budget (CoB) Margaret Nyakang’o.
The report, submitted to the National Assembly’s Public Debt and Privatisation Committee, warns that the country’s debt trajectory is becoming increasingly unsustainable amid rising repayment pressures and constrained revenue performance.
Nyakang’o noted that the debt stock grew from Sh10.6 trillion in 2023/24 to Sh11.7 trillion, representing 67.8% of GDP. She attributed the rise to persistent fiscal deficits, heavy reliance on domestic borrowing, and currency depreciation. Of the total debt, Sh6.3 trillion (54%) is domestic, while Sh5.4 trillion (46%) is external, largely driven by multilateral inflows and increased uptake of Treasury bonds and bills.
The report paints a concerning picture of Kenya’s debt servicing burden, which has now reached Sh1.6 trillion in the current financial year—an amount consuming over 70% of ordinary revenue. Domestic payments dominated at Sh699.5 billion, primarily on Treasury bonds and bills, while external debt service hit Sh540.1 billion, including Sh332.7 billion in principal repayments.
Nyakang’o further highlighted growing vulnerabilities linked to State-Owned Enterprises (SOEs), noting that the government was forced to step in to settle significant guaranteed loans, including those owed by Kenya Airways. “The continued reliance on government guarantees exposes the Treasury to elevated risks and reduces fiscal space for essential services,” the report states.
County pending bills
At the county level, the situation is similarly troubling. Counties have accumulated Sh183.03 billion in pending bills as of June 30, 2025—money owed to suppliers, contractors, and employees. Of this, Sh130.80 billion represents recurrent expenditures, while Sh52.23 billion relates to development projects.
Alarmingly, 45% of the bills are more than three years old, raising concerns about stalled projects, financial mismanagement, and growing legal disputes as suppliers seek redress in court.
The CoB warns that the persistent accumulation of pending bills is undermining service delivery and fiscal discipline at the county level. Public servants and suppliers continue to face delayed payments, eroding confidence in devolved units and harming local economic activity. She urged county governments to prioritise clearing eligible pending bills as the first charge in their budgets, as required by the Public Finance Management regulations.
With the national and county debt pressures mounting, the CoB cautioned that Kenya must embrace aggressive fiscal consolidation and strengthen revenue collection efforts to avoid further erosion of its financial stability. The report now puts pressure on Parliament and the Treasury to craft more sustainable debt strategies amid growing public concern over the rising cost of living and shrinking development spending.
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