Kenya’s total public debt continues to soar under the Kenya Kwanza administration having surged by nearly a trillion since 2023.

The current stock of public and publicly guaranteed debt according to a report by the ministry, stands at Sh11.02 trillion which is 65.7 per cent of the gross domestic product (GDP) as at the end of January 2025, up from Sh10.58 trillion, representing 65.7 per cent of GDP in June 2024. The forecasted January 2025 GDP stands at Sh16.76 trillion.

From the total debts stock, domestic debt contributed Sh5.93 trillion recording a slight growth compared to December last year.

This includes Sh4.93 trillion in Treasury-bonds representing 83.3 per cent of the total domestic debt, Sh0.86 trillion in Treasury-bills making up 14.4 per cent of the debt and Sh0.14 trillion in other domestic debt accounting 2.3 per cent, which includes overdraft from Central Bank of Kenya CBK, the International Monetary Fund (IMF) funds on-lent to Government, and Bank advances.

While government experts claim the debt position is currently sustainable, Cabinet Secretary John Mbadi told a parliamentary committee that it still remains at a risky position requiring special attention.

Mbadi defended the move by the government to take more domestic debt despite the interest rates going down, saying that the rates are determined by factors such as the high demand which have as most of the domestic investors in government securities are much aware of the country’s markets state.

He revealed that Kenya expects more funds from external sources such as the African Development Bank (AFDB) which is set to extend Sh200 million and a DPO that facilitates the extension of Sh750 from Rwanda bank.

“The commercial borrowing which is in our budget, we have not even taken a shilling. So, the domestic people want to invest in domestic borrowing, although the government members will quickly move to buy government members now, because it may not be an option going into June. So that is why you will see the rates coming down. But again, you will have to balance between the domestic borrowing and the external borrowing,” he explained.

As he explained during the meeting, it is crucial for the government to balance between the two sources since borrowing extensively in the domestic market, grounds out the private sector.

At the same time, the government between June 2023 and January 2025 also reduced guaranteed debt stock by Sh90.6 billion from Sh170. 2 billion to 79.6 billion linked with key government institutions such as Kenya Electricity Generating Company (KenGen), Kenya Airways and Kenya Ports Authority (KPA).

Conversely, external debt reduced from Sh6.09 trillion in December 2023 to Sh5.09 trillion in January this year majorly due to the strengthening of the Kenyan shilling against world major currencies such as the greenback.