Kenya added KSh 1.37 trillion to its public debt over 2025, lifting the stock to KSh 12.30 trillion by year end and pushing the debt ratio to 67.5% of GDP according to new data from the National Treasury.
- •Kenya's financing strategy has leaned heavily on domestic markets, with local institutions absorbing most new borrowing as the government restrained foreign market exposure following heavy repayments in late 2024.
- •In 2025, domestic obligations rose by KSh 969 billion to KSh 6.84 trillion, representing about 70% of total debt growth.
- •As a result, domestic debt’s share of the total rose to 55.6%, up from 53.7% a year earlier, while external debt increased by a smaller KSh 405 billion to KSh 5.46 trillion, lowering its share to 44.4%.
Debt servicing pressures intensified alongside the rise in debt stock. By December 2025, cumulative external debt service reached KSh 376.4 billion, representing 52.6% of the full-year FY 2025/26 target of KSh 716.5 billion. Commercial creditors accounted for 59.0% of external debt service, followed by bilateral creditors at 24.9% and multilateral lenders at 16.1%.
Domestic interest costs remained heavy. Cumulative domestic interest payments reached KSh 414.1 billion by December 2025, equivalent to 48.7% of the FY 2025/26 budgeted total of KSh 851.4 billion, even as Treasury bill rates eased from 2024 highs.
At the same time, net domestic financing reached KSh 555.0 billion, already 87.4% of the full-year borrowing target of KSh 634.8 billion, leaving limited room for manoeuvre in the second half of the fiscal year.
FY 2025/26 borrowing and servicing status:
| Item | FY target | Used by Dec | % of target |
|---|---|---|---|
| Net domestic financing | KSh 634.8 billion | KSh 555.0 billion | 87.4% |
| External debt service | KSh 716.5 billion | KSh 376.4 billion | 52.6% |
| Domestic interest payments | KSh 851.4 billion | KSh 414.1 billion | 48.7% |
The financing burden fell squarely on institutional investors:
- •Banks remained the largest holders of government securities, with holdings of KSh 2.32 trillion by December 2025, equivalent to about 34% of domestic debt, even after a nominal decline of roughly KSh 186 billion from December 2024.
- •Insurance companies recorded the fastest growth, more than doubling their exposure from KSh 429 billion to KSh 896 billion, an increase of KSh 467 billion.
- •Pension funds continued to anchor the long end of the yield curve, while household and non-financial corporate participation remained limited, tightening the sovereign–financial sector linkage.
External debt developments in 2025 point to a deliberate rebalancing by creditor and instrument rather than a broad re-entry into global markets.
- •Multilateral lenders drove most of the increase, with exposure rising by KSh 256 billion to KSh 3.03 trillion.
- •The International Development Association added KSh 129 billion, while ADB and ADF increased exposure by KSh 56.7 billion, and IMF lending rose by KSh 41.7 billion.
- •Multilaterals now account for about 56% of total external debt, extending maturities but embedding long-term repayment commitments.
Commercial external debt rose unevenly. International sovereign bonds increased by KSh 280 billion to KSh 1.13 trillion, offset by a KSh 93.5 billion reduction in commercial bank loans, indicating refinancing and valuation effects rather than aggressive new borrowing. Supplier credit rose marginally as net commercial external debt increased by KSh 187.7 billion.
Bilateral trends diverged sharply by country:
- •Italy recorded the largest increase, adding KSh 16.6 billion, followed by France at KSh 11.3 billion and Germany at KSh 7.2 billion.
- •Belgium and Spain also increased exposure, while Japan’s bilateral position remained broadly stable.
- •By contrast, China cut exposure by KSh 63.9 billion, the largest single-country reduction, while the United States reduced exposure by KSh 16.2 billion.
- •Overall, bilateral debt declined by KSh 34.5 billion, despite increased lending from selected European creditors.
External debt by country and creditor group:
Amounts in Kenyan shillingsCreditor Dec 2024 Dec 2025 Change China 692.60 Bn 628.68 Bn −63.92 Bn Italy 27.38 Bn 43.99 Bn +16.61 Bn France 90.23 Bn 101.50 Bn +11.27 Bn Germany 49.83 Bn 57.05 Bn +7.21 Bn Belgium 22.22 Bn 25.53 Bn +3.31 Bn Spain 12.67 Bn 15.32 Bn +2.65 Bn Japan (bilateral) 79.54 Bn 80.13 Bn +0.58 Bn United States 32.13 Bn 15.97 Bn −16.15 Bn Other Paris Club 1.14 Bn 5.70 Bn +4.56 Bn Other non-Paris Club 22.74 Bn 22.18 Bn −0.56 Bn Bilateral subtotal 1,032.54 Bn 998.03 Bn −34.51 Bn Multilateral subtotal 2,777.57 Bn 3,034.03 Bn +256.46 Bn Commercial subtotal 1,168.67 Bn 1,356.39 Bn +187.72 Bn Guaranteed subtotal 78.22 Bn 73.51 Bn −4.71 Bn Total external debt 5,057.01 Bn 5,461.97 Bn +404.96 Bn
