Kenya’s public debt reached KSh 12.06 trillion in September 2025, crossing the KSh 12 trillion level for the first time.
- •Public debt stood at 67.3% of GDP, with domestic debt at KSh 6.66 trillion (37.2% of GDP) and external debt at KSh 5.39 trillion (30.1% of GDP).
- •This reflects a year-on-year increase of KSh 1.26 trillion (+11.7%) from KSh 10.79 trillion in September 2024.
- •The debt-to-GDP ratio rose slightly from 66.5% to 67.3%, indicating that nominal GDP growth was largely keeping pace with borrowing.
From June to September 2025, total public debt increased by about KSh 250 billion, driven by a KSh 340 billion rise in domestic borrowing while external debt declined by about KSh 80 billion.
Shift Toward Domestic Borrowing and Lower Local Funding Costs
The domestic share of public debt increased to about 55%, up from about 52% a year earlier. Domestic debt rose by about KSh 1.06 trillion year-on-year, compared to an external increase of about KSh 200 billion.
This marks a decisive inward shift in the government’s financing model, increasing reliance on the Kenyan financial system while reducing exposure to foreign commercial markets.
Treasury bonds accounted for 83% of domestic securities, while Treasury bills accounted for 17%. Banks remained the largest holders, followed by pension funds and insurance companies.
Borrowing conditions in the domestic market eased substantially. The 91-day Treasury bill rate fell from 15.8% in September 2024 to 7.98% in September 2025. The yield curve returned to a normal upward slope, reflecting improved market liquidity and reduced refinancing stress.
| Segment | Sep 2024 (KSh T) | Sep 2025 (KSh T) | YoY Change (KSh B) |
|---|---|---|---|
| Domestic Debt | 5.60 | 6.66 | +1,060 |
| External Debt | 5.19 | 5.39 | +200 |
| Total Debt | 10.79 | 12.06 | +1,264 |
External Structure Shifts and Reduced FX Risk
Multilateral lenders accounted for 56.7% of external debt, up from 54.9% a year earlier. Bilateral debt declined to 18.5%, while commercial external debt accounted for 23.4%.
Kenya reduced its exposure to USD-denominated obligations, with the share of external debt in USD falling from 62.1% to 52.0%. The euro share rose from 25.5% to 27.9%, indicating currency diversification.
This signifies a meaningful reduction in foreign exchange risk, directly addressing a primary source of debt vulnerability in previous years.
External debt service in September 2025 totaled KSh 97.4 billion, including KSh 74.9 billion in principal and KSh 22.6 billion in interest. Year-to-date servicing stood at KSh 213.09 billion, driven in part by scheduled Eurobond repayments.
In August 2025, S&P Global upgraded Kenya’s rating from B- to B, while Moody’s revised its outlook to positive, reflecting improved liquidity planning and external funding stability.
