NAIROBI, KENYA – The National Treasury has announced its intention to borrow approximately Ksh1.02 trillion during the 2026/27 fiscal year, a critical period preceding the next General Election. The disclosure has amplified concerns over Kenya's rapidly escalating public debt, which has already surpassed the Ksh12 trillion threshold, prompting sharp criticism from political figures and economic analysts.

According to a statement from Treasury Principal Secretary Dr. Chris Kiptoo on Wednesday, November 19, 2025, the borrowing is necessary to bridge a budget deficit projected to be 4.9% of the Gross Domestic Product (GDP). The financing plan consists of Ksh775.8 billion from domestic markets and Ksh241.8 billion from external sources. This strategy signals the government's continued reliance on the local market, a move intended to reduce exposure to foreign exchange volatility but one that risks crowding out private sector credit.

Mounting Debt and Public Scrutiny

The borrowing plan comes at a time when Kenya's public debt has reached historic highs. Data from the National Treasury and the Central Bank of Kenya (CBK) indicates that the total public debt crossed the Ksh12 trillion mark in September 2025, reaching Ksh12.06 trillion. This represents a significant increase from the Ksh11.5 trillion recorded in May 2025 and Ksh10.4 trillion in May 2024. As of June 2025, the debt stood at approximately Ksh11.8 trillion, with the debt-to-GDP ratio hovering around 67%, well above the 50% threshold recommended for developing economies by the International Monetary Fund (IMF).

The relentless accumulation of debt has drawn sharp criticism. In a widely publicized statement in September 2025, Kiharu Member of Parliament and former Chair of the National Assembly's Budget Committee, Ndindi Nyoro, claimed the government was borrowing at a rate of Ksh3.4 billion per day. Nyoro asserted that the country's debt had exceeded Ksh12.1 trillion, arguing that the pace of borrowing was unsustainable and risked burdening future generations. He noted that in just three years, the administration had borrowed more than Ksh3.5 trillion, a figure he contrasted with the Ksh1.2 trillion borrowed over the entire ten-year tenure of former President Mwai Kibaki.

Economic Implications for Kenya

The government maintains that the borrowing is essential for financing critical development projects and public services, including the hiring of 20,000 intern teachers and 10,000 police officers. The 2025 Medium-Term Debt Management Strategy (MTDS) outlines a plan to ensure debt sustainability, aiming to reduce the debt-to-GDP ratio over the medium term and prioritize concessional loans.

However, economists and watchdog organizations express concern over the rising cost of debt servicing, which now consumes a substantial portion of the country's revenue. According to the Controller of Budget, Kenya is projected to spend Ksh1.6 trillion on debt servicing in the current fiscal year, accounting for over 70% of ordinary revenue. This heavy burden limits fiscal space for other essential expenditures and public investments, potentially slowing economic growth.

The shift towards domestic borrowing, while mitigating currency risk, has its own challenges. High government appetite for domestic loans can drive up interest rates, making credit more expensive for businesses and individuals, a phenomenon known as the 'crowding-out' effect. Analysts at the Institute of Public Finance and other institutions have warned that this could stifle private sector investment, which is a key engine of job creation and economic expansion. As Kenya navigates this complex fiscal landscape ahead of the 2027 elections, the balance between funding development and managing a sustainable debt level remains a primary challenge for policymakers.