Kenya public debt hits Sh13 trillion

Kenya’s public debt stock reached Sh13.01 trillion in June 2026. This represents a 10 per cent increase from Sh11.80 trillion in the previous year. The debt-to-GDP ratio stands at 68.5 per cent. The legal limit is set at 55 per cent by the Public Finance Management Act.

The Controller of Budget, Margaret Nyakang’o, urged the National Treasury to reduce borrowing. She cited persistent budget deficits and high debt-service costs as drivers of fiscal pressure. Her report for the 2025/26 financial year calls for a measurable strategy to restore debt sustainability.

Debt composition and growth

Domestic debt accounts for Sh7.32 trillion of the total. This segment represents 56 per cent of the public debt stock. External debt stands at Sh5.68 trillion, making up the remaining 44 per cent. Domestic debt grew by 16 per cent during the review period.

External debt increased by five per cent. This rise followed the issuance of new Eurobonds. New seven-year and 12-year bonds were issued at a blended yield of 8.7 per cent. These issuances followed the buyback of three previous Eurobond tranches.

Service costs and currency risk

Public debt expenditure reached Sh1.77 trillion in the 2025/26 financial year. This amount equals 85 per cent of the approved budget estimates. External debt service totaled Sh716.10 billion, including Sh208.37 billion in interest. Domestic debt payments amounted to Sh1.06 trillion, with Sh759.20 billion paid in interest.

Currency risk remains a significant factor in the debt structure. US dollar-denominated debt accounts for 45 per cent of the total stock. Special Drawing Rights represent 24 per cent, and the euro makes up 19 per cent. The Controller of Budget warns that high foreign currency exposure increases vulnerability to exchange rate fluctuations.

Regulatory requirements and strategy

Section 50 of the Public Finance Management Act mandates compliance with the 55 per cent debt anchor. The Cabinet Secretary must implement measures within five years to meet this threshold. The report advises Treasury to align annual borrowing with the targeted debt path. Strengthening domestic revenue collection is also required to reduce reliance on new borrowing. According to GN auto markets/bonds: sovereign debt, these measures are critical for fiscal stability.