Kenya’s mounting public debt, which has now exceeded Ksh13 trillion, is forcing the government to borrow increasingly just to meet existing financial obligations, according to top financial oversight officials.

Controller of Budget Margaret Nyakang’o and Auditor-General Nancy Gathungu, addressing Parliament, highlighted the urgent need for fiscal discipline to prevent the debt burden from crowding out essential public services.

Debt Servicing Consumes Nearly Half the Budget

The government plans to allocate Ksh2.3 trillion—almost 50% of its proposed Ksh4.82 trillion budget for the 2026/27 fiscal year—towards servicing debt. With expected ordinary revenue and appropriations-in-aid totaling Ksh3.65 trillion, Kenya faces a Ksh1.2 trillion financing gap, which must be filled by further borrowing.

"For every Ksh100 collected, up to Ksh71 goes to debt repayment, leaving only Ksh29 for salaries, healthcare, education, infrastructure, security, and county transfers," Nyakang’o explained. She warned this ratio is unsustainable and urged a reduction in spending to curb borrowing.

Calls for Prudent Borrowing and Fiscal Reforms

Auditor-General Gathungu emphasized that while borrowing remains a vital development tool, it must be transparent, sustainable, and aligned with national priorities. She noted that international bodies like the IMF and World Bank classify Kenya as at high risk of debt distress, underscoring the importance of responsible debt management.

Both officials also raised concerns about Ksh261.63 billion in contingent liabilities from government guarantees and court awards that could increase public debt.

Fiscal Deficits and Oversight Demands

  • Kenya’s fiscal deficits have averaged 6% of GDP over six years, doubling the East African Community’s recommended ceiling of 3%.
  • Public debt has surpassed the government’s target of 55% of GDP, reaching 67.8% by June 2025.
  • A petition by civil society groups urges Parliament to strengthen oversight, create a public debt registry, and involve independent experts before approving new loans.

Both Nyakang’o and Gathungu agree that restoring fiscal discipline and reducing expenditure growth are critical to ensuring future budgets prioritize public welfare over debt repayment.