Kenya's total public and publicly guaranteed debt rose to KSh 12.40 trillion by the end of January 2026, adding KSh 1.41 trillion over the preceding twelve months and pushing the debt-to-GDP ratio to 67.6%, according to the National Treasury's latest monthly bulletin.
- •The increase extends a trajectory that has seen Kenya's nominal debt stock roughly double since 2019, with no meaningful inflection point in sight.
- •Domestic debt remained the primary driver of accumulation, rising KSh 963 billion (+16.2%) year-on-year to KSh 6.89 trillion.
- •External debt rose KSh 450 billion (+8.9%) year-on-year to KSh 5.51 trillion, though the January bulletin attributes the monthly increase of KSh 45 billion largely to valuation effects rather than new disbursements.
The IMF's April 2026 Regional Economic Outlook projects the ratio rising further to 71.6% of GDP in 2026 and 72.4% in 2027, approaching the 2023 peak of 73.4% on the back of persistent fiscal deficits estimated at 6.4% of GDP in both 2025 and 2026.
In the first seven months of FY2025/26, domestic debt added KSh 504.65 billion, accounting for 80.6% of the KSh 626 billion added since July 2025.
Treasury bonds now account for 81.8% of the domestic stock, with the bond-to-bill ratio at 82:16. The average time to maturity edged up to 7.85 years from 7.78 years in December, as GoK continued push toward longer-tenor issuance.
On the new borrowing front, the government contracted three loans between 1 November and 31 December 2025. The largest, a CNY 1.33 billion (KSh 25.17 billion, US$ 194.87 million) Export-Import Bank of China facility for the Nairobi Intelligent Transport Systems project, signed 26 November 2025, on 27-year terms at 2% per annum, has yet to be drawn.
Germany provided the other two: a EUR 38 million (KSh 5.78 billion) SAFER facility supporting MSME liquidity on 67-year concessional terms, and a EUR 28 million (KSh 4.26 billion) TVET digitisation loan on 66-year terms at 0.75%-1.20%. Of the three, only the TVET facility has been fully disbursed.
The financing burden continues to fall heavily on institutional investors. Banks held KSh 2.36 trillion of domestic debt by January 2026, equivalent to about 34% of the total domestic stock. Insurance companies and pension funds collectively held KSh 1.90 trillion, reinforcing the tight sovereign-financial sector linkage that has deepened through the current fiscal cycle.
Net domestic financing reached KSh 458.25 billion against an annual target of KSh 634.75 billion, with 72.2% of the full-year programme absorbed through the first seven months. Cumulative domestic interest payments of KSh 479.67 billion against a KSh 851.42 billion budget reflect the compounding cost of a KSh 5.64 trillion bond stock.
External Debt
The shilling depreciated 1.7%, 1.6%, and 2.2% against the Japanese Yen, Euro, and Sterling Pound respectively during January, mechanically inflating the KSh value of multilateral and bilateral exposures denominated in those currencies. Multilateral debt, which now accounts for 56.3% of total external debt, rose KSh 65.49 billion on this basis alone.
China's bilateral exposure continued to contract, falling a further KSh 22.63 billion in January to KSh 606.05 billion, extending the KSh 63.9 billion reduction recorded across the full year 2025, as Beijing's bilateral footprint in Kenya continues its measured retreat.
External debt service in January totalled KSh 55.70 billion, comprising KSh 34.15 billion in principal and KSh 21.55 billion in interest. Cumulative FY external debt service reached KSh 432.95 billion, 60.4% of the KSh 716.46 billion annual target.
The period's most significant credit development was Moody's upgrade of Kenya's sovereign rating to B3 with a stable outlook on January 27, from Caa1 positive. The agency cited reduced near-term default risk, stronger FX reserves, a narrower current account deficit, and progress on Eurobond liability management. At 4.9 months of import cover per the IMF, reserve adequacy has improved, though the upgrade reflects a lower floor rather than a resolved fiscal trajectory.
The statutory debt anchor of 55% of GDP under the Public Finance Management Amendment Act 2023, which Kenya is required to meet by 2028, remains distant. The IMF's projections place the ratio at 72.4% in 2027, leaving a 17-percentage-point gap against a 2028 deadline.
