Treasury Cabinet Secretary John Mbadi on Wednesday, March 26 revealed that Kenya is on track to pay its Ksh11 trillion debt but stressed that challenges lie ahead as it seeks to repay its debt.

While speaking at the Dissemination of the 2025 Medium-Term Debt Management Strategy, Mbadi noted that the key challenge lay in the constrained maturity periods rather than the ability to repay debt.

“If you ask me, I do not think that Kenya has a problem with debt payment. The debt sustainability for Kenya is perfect,” Mbadi stated.

“The only problem we have is that the maturing of debts is concentrated within a short period of time,” he added.

National Treasury Cabinet Secretary John Mbadi flanked by other ministry officials during a press briefing on February 13, 2025, at the Treasury Building in Nairobi.

Photo

National Treasury

This means that while Kenya’s overall debt situation is stable and manageable, the main challenge lies in the short repayment timelines rather than the actual ability to repay the debt.

According to Mbadi, the short timeframes put pressure on government finances, suggesting that while Kenya can meet its debt obligations, the urgency of repayment deadlines could create cash flow challenges.

Currently, Kenya has a public debt of Ksh11 trillion. Of this, Ksh5 trillion comprises domestic debt, while Ksh5.09 trillion accounts for external debt. Domestic debt largely consists of Treasury Bills and Bonds, whereas external debt is owed to multilateral, bilateral, and commercial creditors.

While acknowledging that Kenya was experiencing its most turbulent period in history regarding debt repayment, Mbadi warned Kenyans to brace for a period of debt distress that would place additional financial strain on households.

Currently, Kenya’s debt level stands at 63 per cent of its GDP well below the stipulated 55 per cent. The end date for Kenya to comply with the regulations is November 1, 2029.

Even so, the CS explained that measures were being implemented to ensure Kenya’s debt remains sustainable both in the medium and long term.

To reduce domestic debt, Mbadi stated that the government would gradually decrease the stock of Treasury Bills while lengthening debt maturity and issuing more medium- and long-term debt securities.

For external debt, the strategy would involve a mix of concessional optimisation and reducing reliance on commercial loans. Concessional optimisation refers to prioritising loans with favourable terms, such as low-interest rates, extended repayment periods, and grace periods before repayment begins. These types of loans typically come from institutions like the World Bank, the IMF, or bilateral lenders (countries offering aid).

Mbadi assured that if implemented within the period stipulated (2027/2028 Financial Year), the strategies will result in the expected composition of public debt by then will be 45 per cent external and 55 per cent domestic.

President William Ruto during a meeting with IMF officials and officials from the Kenyan national treasury at State House in Nairobi on November 13, 2023

PCS