Debt crisis: Inside Kenya’s rising borrowing, budget gaps, and questions over value for money
By Ndiritu Wanjiru, April 1, 2026Kenya’s bid to increase its debt levels to Ksh12.6 trillion is not happening in isolation, and its connection to a growing gap between budget proposals and what the country can realistically afford has serious implications for its ability to repay its debt and deliver value to its citizens.
Although the government continues to justify its borrowing needs, a critical analysis of its expenditure and project implementation raises serious questions about whether Kenyans are getting value for money from the debt they are accumulating in their name.
The core problem here has been a mismatch between what the exchequer takes in and what it spends, and in this regard, budget proposals in Kenya have always been expansionary, with increased allocations for infrastructure, public administration, and recurrent expenditure, among other areas. However, its ability to collect revenues has not kept pace, and in its bid to fill this gap, borrowing from both local and foreign markets has become the norm.
Is budget expansion matched by revenue growth?
The critical question here, therefore, remains whether this borrowing is being matched by corresponding investment or whether we are simply seeing a propping up of a ballooning budget.
In theory, borrowing can be a powerful development tool if matched with investment in areas and projects that can stimulate growth, create jobs, and deliver returns, and although borrowing has been a core part of development, its link to tangible benefits in Kenya has increasingly become tenuous.
Much of what has been borrowed continues to find its way into large-scale infrastructural projects, and although some of them, such as building new roads and developing new energy projects, are critical to our development, questions have increasingly been asked regarding costs, implementation timelines, and quality, with reports of new roads deteriorating soon after they are built and projects being delayed or implemented shoddily.
Quality of Spending vs. Rising Debt
The disconnect between spending and outcomes may indicate a structural problem. The lack of accountability, inefficiencies in the procurement process, and the potential for corruption mean that borrowed money may not be converted into quality assets. Essentially, Kenyans may be paying for projects that are worth a fraction of the cost incurred.
At the same time, a greater proportion of the debt is being used for recurrent expenditure, such as salaries, administrative costs, and debt servicing. This is a problem because such spending does not have a future
Controller of Budget warns of fiscal instability
Kenya’s fiscal stability has come under renewed scrutiny after the Controller of Budget (CoB), Dr Margaret Nyakang’o, warned Parliament that the country risks sinking deeper into a debt trap driven by costly borrowing and poor coordination in project implementation.
Appearing before the National Assembly’s Committee on Public Debt and Privatisation, chaired by Mbalambala MP Shurie Abdi Omar, Nyakang’o painted a grim picture of the country’s financial health, describing a “vicious cycle of debt accumulation” that is steadily eroding fiscal space and undermining effective budget execution.
She revealed that Kenya’s public debt had risen to Ksh12.29 trillion as of December 2025, equivalent to 67.8 per cent of the gross domestic product (GDP), well above the statutory ceiling of 55 per cent.
Of greater concern, she noted, is the growing cost of servicing this debt.
“Half of debt payments are only financial costs rather than debt reduction. The principal figure is not reducing; we are just paying interest,” Nyakang’o said, adding that interest payments alone now stand at Ksh464.49 billion, accounting for 54 per cent of total debt service.
The CoB further warned of what she termed “hazardous borrowing”, where the government takes on new loans to service existing ones.