Mounting Debt and Fiscal Pressure

NAIROBI—President William Ruto’s administration has added over Sh3 trillion to Kenya's public debt since taking office in September 2022, escalating the nation's total debt stock to unprecedented levels. According to a document presented to the National Assembly's Public Debt and Privatisation Committee by the Central Bank of Kenya (CBK), the country's total public debt surged from Sh8.7 trillion in the 2021/22 financial year to Sh11.81 trillion by June 30, 2025. This represents an average borrowing rate of approximately Sh1 trillion per year.

More recent data from the National Treasury and CBK indicates the debt has continued to climb, crossing the Sh12 trillion mark by September 2025. This rapid accumulation has pushed Kenya’s debt-to-GDP ratio to nearly 68%, a figure that has prompted warnings from international financial institutions. The World Bank and the International Monetary Fund (IMF) maintain that Kenya remains at a high risk of debt distress, a situation where a country struggles to meet its debt repayment obligations.

Shift to Domestic Borrowing

A significant strategic shift under the current administration has been an increased reliance on domestic financing. As of June 2025, domestic debt stood at Sh6.33 trillion, while external debt was Sh5.5 trillion. This pivot is a deliberate move to reduce exposure to foreign exchange volatility, which became a major concern after a weakening shilling previously inflated the size of dollar-denominated loans. However, this strategy has its own consequences. The government's aggressive domestic borrowing has been flagged for potentially “crowding out” the private sector, as commercial banks find it more lucrative and less risky to lend to the state than to businesses and individuals, potentially stifling broader economic growth.

The Transparency Question: Where Did the Money Go?

Despite the colossal sums borrowed, a clear, itemized breakdown of how the Sh3 trillion has been utilized remains largely opaque. The CBK's report to Parliament, which detailed the debt figures, did not specify the projects financed by these loans, a point of concern for lawmakers and economic analysts. While some recent loans have been linked to specific programs, such as a Sh16.4 billion loan from the International Fund for Agricultural Development for natural resources management, these constitute a small fraction of the total.

An audit report from the Auditor General covering the period between July 2018 and June 2023 revealed a worrying trend: Sh2.67 trillion raised from domestic bonds was channeled into the Consolidated Fund to finance recurrent expenditure—such as salaries and administrative costs—and to service maturing debt, rather than funding development projects as required by the Public Finance Management Act, 2012. This raises critical questions about whether the current borrowing continues to fund consumption and debt servicing rather than productive investments that would generate economic returns and ease future repayment burdens.

Economic Impact and the Kenyan Citizen

The ballooning debt has direct implications for Kenyans. The cost of servicing this debt is now consuming a substantial portion of the nation's revenue. For the 2024/2025 fiscal year, Treasury data shows debt service payments amounted to Sh1.72 trillion. This immense expenditure constrains the government's ability to fund essential services such as healthcare, education, and infrastructure. Economists have pointed out that high debt levels necessitate higher taxes to meet repayment obligations, a burden ultimately borne by the citizens. This was a central issue during the contentious Finance Bill 2024 protests, where the government's push for increased taxes was met with widespread public resistance.

President Ruto's administration came to power on a platform of fiscal consolidation and a promise to curb the borrowing appetite that characterized the previous government. However, the data indicates that the pace of borrowing has accelerated. While the government's Medium-Term Debt Management Strategy aims to achieve a debt-to-GDP ratio of 55% by 2029, the current trajectory suggests this will be a significant challenge requiring stringent fiscal discipline and robust economic growth. For now, the Sh3 trillion question of how the borrowed funds have been specifically used to benefit the Kenyan public remains unanswered, posing a significant challenge to transparency and accountability in the management of public finances.