Kenya’s fiscal structure has undergone a dramatic shift in recent decades, with public debt interest payments rising at an unprecedented pace.
- •Between July 2023 and June 2024, Kenya spent KSh 840.73 billion on servicing public debt, setting a new record.
- •In the first six months of current 2024/25 financial year, which begun in July 2024, Kenya has already paid KSh 585.63 billion in debt interest — comprising KSh 444.73 billion in domestic interest and KSh 140.90 billion in foreign interest.
- •This puts Kenya firmly on track to surpass KSh 1 trillion in total debt interest payments by the end of June 2025.
Kenya is currently paying an average of KSh 83.66 billion per month in debt interest, up from about KSh 70 billion monthly in the previous fiscal year.
Recent data from the Central Bank of Kenya (CBK) and the National Treasury shows that:
- •Gross Domestic Debt climbed from KSh 5.41 trillion in June 2024 to KSh 6.15 trillion by April 17, 2025.
- •Total Public Debt (domestic and external) stood at KSh 10.93 trillion by December 2024, up from KSh 10.56 trillion in June 2024.
- •On February 14, 2025, Kenya’s gross domestic debt officially crossed the KSh 6 trillion mark for the first time in history.
Within the domestic debt structure:
- •Treasury bills expanded sharply to KSh 932.16 billion by April 2025 from KSh 615.89 billion in June 2024.
- •Treasury bonds remained dominant, hovering around KSh 5 trillion.
The rising reliance on short-term borrowing instruments, especially T-bills, has intensified the domestic debt servicing burden.
Kenya’s Public Debt Growth Across Presidencies
| President | Domestic Debt at Start (KSh B) | Foreign Debt at Start (KSh B) | Total Debt at Start (KSh B) |
|---|---|---|---|
| Mwai Kibaki (2002) | 259.83 | 369.73 | 629.56 |
| Uhuru Kenyatta (2013) | 981.91 | 812.70 | 1,794.61 |
| William Ruto (2022) | 4,366.00 | 4,334.00 | 8,700.00 |
As of April 2025:
- •Domestic debt stands at over KSh 6.15 trillion.
- •Public debt (domestic + external) exceeds KSh 10.93 trillion.
Kenya’s short-term borrowing costs have seen major fluctuations:
- •Rates were below 8% through much of 2021 and 2022.
- •Peaked between October and December 2024:
- •91-Day: up to 15.8%
- •182-Day: up to 16.8%
- •364-Day: up to 16.9%
Despite recent easing, previous expensive issuances are still maturing, keeping interest payments elevated.
- •Treasury bills accounted for over 15% of total domestic debt as of April 21, 2025 — for the first time in two years.
- •Short-term borrowing has increased debt servicing costs and refinancing risks.
Debt Interest vs Development Expenditure: A Widening Gap
While debt servicing has soared, development expenditure has lagged behind.
| Fiscal Year | Development Expenditure (KSh B) | Total Debt Interest Paid (KSh B) | Debt vs Development Comparison |
|---|---|---|---|
| 2015 | 511.82 | 169.02 | Development > Debt (3x bigger) |
| 2016 | 483.60 | 203.37 | Development > Debt (2.4x bigger) |
| 2017 | 660.00 | 266.39 | Development > Debt (2.5x bigger) |
| 2018 | 485.67 | 323.89 | Development > Debt (1.5x bigger) |
| 2019 | 529.20 | 368.55 | Development > Debt (1.4x bigger) |
| 2020 | 594.94 | 437.20 | Development > Debt (1.4x bigger) |
| 2021 | 548.53 | 495.14 | Development > Debt (1.1x bigger) |
| 2022 | 535.78 | 577.66 | Debt > Development (1.08x bigger) |
| 2023 | 546.39 | 684.51 | Debt > Development (1.25x bigger) |
| 2024 | 546.39 | 840.73 | Debt >>> Development (1.54x bigger) |
| 2025 (July–Jan) | 290.10 | 585.63 | Debt >>> Development (2.02x bigger) |
In 2015, development spending was more than three times larger than debt interest payments. By January 2025, the situation has flipped, with debt interest payments now more than double development expenditure.
Implications for Kenya’s Fiscal Outlook
Reduced Fiscal Space for Development:
In the first seven months of FY2024/25, debt interest payments of KSh 585.63 billion were already double the development expenditure. This highlights a severe crowding out of funds that could otherwise support infrastructure, health, education, and other public services.
Crowding-Out Private Sector Credit:
With domestic debt above KSh 6.15 trillion and Treasury bills exceeding KSh 932 billion, government borrowing continues to absorb domestic liquidity, limiting private sector access to credit.
Higher Future Borrowing Costs:
Kenya’s 91-day T-bill rates, after peaking in late 2024, remain elevated. Past expensive issuances are maturing, locking the government into costly refinancing cycles.
“There is little investment in the future, raising concerns about the sustainability of current borrowing. As debt repayment pressures mount, our creditworthiness may weaken further, driving up borrowing costs,” said Stellar Swakei, Analyst at Standard Investment Bank (SIB).
Rising Fiscal Sustainability Risks:
Total public debt crossed KSh 10.93 trillion by December 2024. The debt service-to-revenue ratio continues to worsen. Interest payments, on pace to exceed KSh 1 trillion, raise alarm over Kenya’s ability to manage its fiscal position.
“Debt servicing has become a major burden, consuming almost 80% of ordinary revenues. Kenya’s fiscal health is fragile, with most resources now channelled towards debt repayment instead of development,” Swakei added.
The Way Forward:
Analysts warn urgent action is needed.
“To address this, Kenya must mobilise internal resources, curb fiscal leakages, and adopt firm austerity measures. Without this, deep expenditure cuts may become inevitable,” Swakei noted.
Kenya is now firmly on a path where public debt interest payments could top KSh 1 trillion for the first time. This underlines the urgency for stronger fiscal consolidation, prudent debt management, and accelerated revenue mobilization to avoid escalating debt vulnerabilities into a full-blown crisis.
