Kenyans are witnessing a significant rise in the country's public debt, which has now topped KSh 13 trillion for the first time, according to the Central Bank of Kenya's latest report.
The debt stock hit KSh 13.011 trillion by the end of June 2026, marking an increase of approximately KSh 4.3 trillion since President William Ruto assumed office in August 2022 when the debt stood at KSh 8.7 trillion.
Debt Growth and Structure
The pace of borrowing has accelerated, with the KSh 10 trillion mark crossed just 15 months prior in June 2025. The current debt composition shows domestic debt at KSh 7.327 trillion and external debt at KSh 5.685 trillion, skewing heavily towards domestic borrowing. This deviates from the government's medium-term debt management strategy, which aimed for an even split between domestic and external debt to mitigate currency risk.
IMF's Call for Broader Debt Definition
The International Monetary Fund (IMF) has recommended that Kenya expands its public debt definition to include arrears, securitisation funds, and loans held by state corporations without government guarantees. Incorporating these could raise the debt figure by over KSh 1 trillion.
However, Treasury Cabinet Secretary John Mbadi has opposed this approach, arguing that securitised debt—backed by future tax revenues rather than direct government guarantees—should not be classified as sovereign debt. This disagreement has stalled negotiations on a new IMF lending programme following the expiry of the previous USD 3.6 billion facility in April 2025.
Implications
- Debt repayments now consume nearly 75% of government revenue.
- The ongoing debate with the IMF complicates access to further financial support.
- The higher domestic debt share exposes Kenya to greater currency fluctuation risks.
As Kenya approaches its general election cycle, managing the growing debt burden and reaching consensus with international lenders remain critical challenges for the government.
