Treasury Cabinet Secretary John Mbadi has received demands from the Controller of Budget (COB), Margaret Nyakango, to reduce the country’s Gross Domestic Product (GDP) debt ratio to 55% by 2029.
In a report reviewing the 2025 Medium-Term Debt Management Strategy, the COB stated that the National Treasury should develop a roadmap to achieve the benchmark debt threshold of 55% of GDP by 2029.
According to Nyakango, Kenya's total nominal public debt has been declining from 71.9% in 2022 to 65.7% in June 2024.
"The total nominal public debt as a percentage of GDP in Kenya has been declining, decreasing from 71.9% in 2022 to 65.7% in June 2024. As per the 2025 Budget Policy Statement, this ratio will decrease to 52.5% in 2029," reads a statement.
"The debt-to-GDP ratio is notably higher than the International Monetary Fund's recommended threshold of 50% for developing countries," part of the statement reads.
Nyakango emphasised that achieving a more favourable debt level should remain a priority.
The COB stated that the National Treasury must adopt strategies focused on debt management and revenue collection reforms to prevent deeper financial instability.
In the review, Nyakango revealed that in December 2024, Kenya’s public debt stock stood at Sh10.93 trillion, with Sh5.06 trillion owed to external lenders (46%) and Sh5.87 trillion to domestic lenders (54%).
In the first six months of FY 2024/2025, total expenditure on public debt amounted to Ksh 666.34 billion, compared to Ksh 597.58 billion recorded in the same period in FY 2023/2024.
"The increase is mainly due to the settlement of domestic debt relating to treasury bills and bonds, which stood at Ksh 432.83 billion compared to Ksh 355.17 billion paid in the same period in FY 2023/24," Nyakango noted.
Nyakango stated that Parliament should require the National Treasury to provide details of actions taken in FY 2024/25 to reduce short-term debt and mitigate the high refinancing risks.
The COB further explained that the implication is that the National Treasury has a shorter period to settle debts and is subject to a higher interest rate.
"The Resource Mobilisation Department at the National Treasury should explain the actions being taken to improve interest rates and extend the grace period," Nyakango added.
