Public debt hits Sh12.04tr as domestic borrowing grows locally

Controller of Budget Dr. Margaret Nyakang’o. [Boniface Okendo, Standard]

The Public debt stock stood at Sh12.04 trillion as of September 30,2025, comprising Sh5.39 trillion owed to external lenders and Sh6.65 trillion to domestic lenders.

Controller of Budget (CoB) Margaret Nyakang’o said the public debt stock rose by two per cent in the three months from July 1, increasing from Sh11.80 trillion to Sh12.04 trillion. 

According to the National Government Budget Implementation Review Report for the first three months of the 2025/26 financial year, external debt declined by two per cent due to repayments, while domestic debt grew by five per cent, driven by increased borrowing in the domestic market.

“The allocation for public debt servicing in the 2025/2026 financial year amounted to Sh1.90 trillion, compared to revised estimates of Sh1.74 trillion in 2024/2025 financial year. This comprises Sh803.70 billion for principal redemption and Sh1.10 trillion for interest payments,” Dr Nyakang’o said.

The report shows that total expenditure on public debt in the first three months of the 2025/26 financial year amounted to Sh507.98 billion, representing 27 per cent of the revised estimates. This compares with Sh325.52 billion, or 17 per cent, recorded over a similar period last year.

Nyakang’o said the increase was mainly due to the settlement of principal payments on both external and domestic debt, which rose to Sh251.80 billion from Sh95.54 billion in the same period of the 2024/25 financial year.

External debt servicing totalled Sh213.09 billion, comprising Sh141.10 billion in principal repayments, Sh71.68 billion in interest payments, Sh255.37 million in commitment fees and Sh50.28 million in other charges.

Domestic debt payments amounted to Sh294.89 billion, including Sh110.70 billion for principal repayment and Sh184.20 billion for interest.

During the period under review, the overdraft limit stood at Sh97.05 billion and attracted an average interest rate of 9.6 per cent per annum on outstanding balances at the end of each month. In the first three months of the current financial year, total charges on the overdraft facility came to Sh697.47 million.

“The decline in overdraft interest payments during the reporting period, compared with a similar period in the 2024/25 financial year, was mainly due to lower Central Bank of Kenya interest rates, which stood at 9.5 per cent in August 2025, down from 12.75 per cent in August 2024,” Ms Nyakang’o said.

Total payments towards pensions and gratuities in the first three months of the year amounted to Sh36.57 billion.