The Controller of Budget has laid out the numbers. They are not pretty.
Kenya’s top budget watchdog, Controller of Budget Dr. Margaret Nyakang’o, has tabled a damning portrait of a country that has borrowed aggressively, spent recklessly, and is now hawking strategic national assets to plug holes in a fiscal plan that was broken to begin with.
Her latest National Government Budget Implementation Review Report — covering the first half of the 2025/2026 financial year — should be required reading for every Kenyan.
It isn’t a bureaucratic document. It is a fiscal autopsy of a government spending tomorrow’s money today.
Alarming Debt Figures
Kenya’s public debt rose to Sh12.29 trillion by December 31, 2025 — a four percent jump from Sh11.80 trillion in June 2025. Of this, Sh6.82 trillion was borrowed from domestic lenders and Sh5.46 trillion from external creditors.
That figure alone is staggering. But what makes it worse is the trajectory.
Dr. Nyakang’o noted that the increase in the first six months of the 2025/2026 financial year represented 67.8 percent of GDP — far exceeding Parliament’s approved threshold of 55 percent.
The debt level is significantly above the statutory ceiling of 55 percent of GDP and continues to exert substantial pressure on public finances, the CoB told MPs directly during the tabling of her report. Kenya is not flirting with its debt ceiling. It has blown past it.
Borrowing at Sh3B a Day
Domestic debt alone rose by more than Sh514 billion in the period, largely driven by aggressive issuance of Treasury bills and bonds.
The government was, in effect, borrowing about Sh3 billion every single day from local lenders.
This shift to domestic borrowing is not just a volume problem — it is a price problem. Domestic debt carries an average interest rate of about 12 percent, more than double concessional external loans.
Kenya is paying a premium to borrow at home, crowding out private sector credit and driving up the cost of doing business across the economy.
The IMF recommends that a country’s total debt service should not exceed 30 percent of revenue. Kenya’s domestic debt servicing alone already surpasses that threshold.
Dr. Nyakang’o was blunt: when that much revenue goes to debt, virtually nothing is left for roads, hospitals, or schools.
High Debt Interest
Interest payments of Sh464.49 billion account for 50.4 percent of total debt service — meaning half of Kenya’s debt payments go to financing costs rather than reducing the principal.
The country is running to stand still, paying more to service old debt than to actually retire it.
Without sustained deficit reduction, liability management operations and maturity profile adjustments, though beneficial, will only redistribute risk over time rather than resolve the underlying fiscal imbalance, Nyakang’o warned.
In plain language: reshuffling the debt deck is not a solution.
Konza City, Guaranteed Loans
The CoB’s report also flags the proliferating universe of government-guaranteed loans to state corporations — a shadow debt pile that rarely gets the attention it deserves.
Among those with outstanding guaranteed obligations: Kenya Airways, Kenya Electricity Generating Company (KenGen), and the Kenya Ports Authority.
Konza Technopolis — Kenya’s long-promised Silicon Savannah — is another exhibit in the loan-funded ambition gallery.
In 2019, China Eximbank signed a Ksh17 billion concessional loan agreement with Kenya to finance the Konza Data Centre and Smart City Project — with the first repayment date falling on March 31, 2026.
A project years behind schedule, now entering the repayment window. Whether Konza has generated the economic returns to justify that debt is a question the government has not answered publicly.
Selling Strategic Assets
Faced with a fiscal crisis partly of its own making, the Ruto administration’s answer has been to sell the family silver. Kenya launched the privatisation of Kenya Pipeline Company, aiming to raise $824 million from an IPO — selling a 65% stake, channelling proceeds toward infrastructure projects.
The government’s justification is fiscal: by selling a profitable asset like KPC, it aims to raise Sh100 billion without incurring new debt, with proceeds earmarked to fund development projects and support the 2025/2026 budget.
But critics note the contradiction embedded in this logic. KPC is a profitable, strategic monopoly.
The National Treasury is also considering whether to sell shares in KenGen and Kenya Power — and opinion is divided on whether such sales represent good value, given they permanently reduce future dividend inflows to the state.
Put simply: Kenya is selling income-generating assets to pay down debt it should not have accumulated in the first place.
It is the fiscal equivalent of selling rental property to cover a credit card bill.
What CoB Is Saying
Dr. Nyakang’o’s message across multiple reports is consistent and urgent.
Borrowing should be strictly aligned with development projects that have measurable economic and social returns.
Instead, the government has used borrowed money for recurrent expenditure — salaries, operations, bond buybacks — with little to show in productive assets.
Unchecked borrowing could lead to refinancing risks due to high domestic interest rates, a debt trap, and limited funds for recurrent and development activities, she has warned.
That warning has not been heeded. Kiharu MP Ndindi Nyoro has gone further, arguing that the Kenya Kwanza regime is borrowing recklessly because it is focused on re-election — rushing to implement everything within a single year ahead of 2027.
Bottom Line
Kenya is not in a debt crisis yet. But the trajectory is dangerous, and the choices being made — borrow more, sell assets, delay hard decisions — are not the choices of a government with a credible plan. They are the choices of a government buying time.
At Sh12.29 trillion and climbing, with interest payments consuming over half of every debt-service shilling, and with strategic national assets on the auction block, the question Kenyans must now ask their leaders is a simple one:
What exactly are we borrowing for, and who will pay for it?
