The National Treasury’s 2025 Debt Sustainability Analysis reveals a fragile fiscal reality: Kenya is solvent, but walking a tightrope over a chasm of debt distress.

Kenya’s economy is not crashing, but the warning lights are flashing red. The National Treasury’s 2025 Debt Sustainability Analysis (DSA) released this week concludes that while the country’s public debt remains sustainable, the risk of debt distress has escalated to "High."

This paradox—sustainable yet distressed—captures the predicament of a nation borrowing to pay off yesterday’s development while struggling to fund today’s needs. The report is a sobering scorecard for President Ruto’s economic team as they navigate a global financial minefield.

The Numbers Game

The DSA indicates that the Present Value (PV) of public debt currently stands at 63.0% of GDP, significantly breaching the statutory anchor of 55%. The Treasury has set itself a deadline of November 2029 to bring this metric back within legal limits. Until then, austerity is not a choice; it is a mathematical necessity.

“We are paying for the infrastructure boom of the last decade,” a Treasury official noted anonymously. “The roads are built, but the bills are now due.”

• Total Debt: Estimated at over KES 10.5 trillion.
• Service Ratio: Debt service continues to consume over 60% of ordinary revenue, leaving crumbs for development.
• External Shock: The shilling’s volatility against the dollar remains the single biggest threat to this fragile sustainability.

A Regulatory Tightrope

The "High Risk of Distress" classification specifically means that Kenya’s safety margins are thin. A sudden shock—such as a spike in global oil prices or a drought—could push the country into default territory. To mitigate this, the government is aggressively pursuing concessional loans from the World Bank and IMF to replace expensive commercial debt (Eurobonds).

The Road Ahead

The Treasury’s strategy is clear: fiscal consolidation. This means higher taxes and reduced spending will likely persist through the medium term. For the average Kenyan, the macro-economic "sustainability" translates to micro-economic pain, as the cost of living remains tethered to the government's repayment schedule.

As the 2029 deadline looms, the government faces a race against time to grow the GDP faster than the debt accumulates. It is a gamble on growth, with the nation’s sovereignty as the collateral.