Kenya Kwanza has increased the country’s public debt by Sh3 trillion in just three years, raising concerns over the sustainability of government borrowing. A Central Bank of Kenya (CBK) report presented to the Public Debt and Privatisation Committee shows that the government’s debt stock has grown sharply under President William Ruto, with domestic loans forming a larger portion of the total.
According to the CBK data presented by Governor Kamau Thugge, the national debt stood at Sh8.7 trillion during the 2021/22 financial year, coinciding with President Ruto’s first year in office.
By June 30, 2025, it had jumped to Sh11.81 trillion, marking a 17 percent rise. The increase has been driven largely by domestic borrowing, which has heightened the pressure on government finances. “Recent borrowing targets have been quite ambitious as the domestic market continues to support growing budgetary financing requirements,” the document states.
On average, the administration has borrowed Sh1 trillion every year, but the CBK report does not detail which projects were financed with this money. The total debt comprises Sh6.33 trillion in domestic loans and Sh5.5 trillion in external borrowing.
President Ruto assumed office on September 13, 2022, pledging fiscal consolidation to limit debt growth in an economy recovering from drought, floods, and the Covid-19 pandemic.
Before the Kenya Kwanza government took charge, the country’s debt was Sh7.7 trillion in 2020/21, with foreign loans at Sh3.999 trillion and domestic debt at Sh3.7 trillion.
Ruto’s fiscal consolidation reforms aimed to reduce the debt-to-GDP ratio, which is now at 69 percent. In October 2023, Parliament revised the Public Finance Management Act, replacing the Sh10 trillion debt ceiling with a 55 percent debt-to-GDP limit in Net Present Value terms.
Interest payments on domestic debt have steadily climbed, reflecting Kenya’s reliance on local borrowing. In the 2020/21 financial year, domestic interest obligations were Sh388.8 billion.
They rose to Sh456.8 billion in 2021/22, Sh533.1 billion in 2022/23, Sh622.5 billion in 2023/24, and hit Sh776.3 billion in 2024/25.
While Dr Thugge notes that public debt is still manageable, he warns that it carries “a high risk of debt distress.” This signals potential challenges in meeting payment obligations if revenue targets are missed or unpopular policies affect the economy.
The increase in domestic interest payments, particularly on Treasury bonds, reflects the growing reliance on local financing and its cost to the national budget.
