Public debt hits 13.48 trillion a few months to 2027 polls
Financial Standard
By
Brian Ngugi
| Oct 27, 2026
Kenya's public debt climbed to Sh13.475 trillion in August this year, a 54.9 per cent jump in the three years and 11 months since President William Ruto took office, Central Bank of Kenya (CBK) data showed.
The stock is Sh4.77 trillion higher than the Sh8.701 trillion recorded in September 2022, the month President Ruto was sworn in, according to the CBK's weekly bulletin dated October 23.
It now equals 72.3 per cent of the gross domestic product (GDP) in nominal terms, above the 55 per cent anchor that Parliament approved, with more than two-thirds of the revenue going to servicing it, according to the Treasury and the Controller of Budget.
Election years in Kenya are when spending pressure peaks and tolerance for tax rises collapses, analysts say. Kenyans will go to the polls on Tuesday, August 10, 2027, for the General Election.
Treasury has projected a Sh1.15 trillion deficit for 2026/27, to be financed largely through domestic borrowing, a path that pushes up interest rates and squeezes credit to businesses.
Domestic debt stood at Sh7.676 trillion, or 56.9 per cent of the total, while external debt stood at Sh5.799 trillion, the CBK bulletin showed.
That split breaches the government's medium-term strategy of a 50:50 balance meant to shield the budget from exchange-rate swings, data shows.
In August alone, domestic debt rose Sh205.23 billion, the Treasury's monthly debt bulletin separately showed.
Treasury bonds rose Sh208.45 billion to Sh6.366 trillion, while Treasury bills rose Sh58.96 billion to Sh1.203 trillion.
The bond-to-bill ratio is 84:16, meaning Treasury is leaning on longer-term debt, which is costlier, but it reduces the risk of having to refinance large volumes at short notice.
Commercial banks hold the largest domestic share, Sh2.617 trillion, followed by other financial corporations at Sh1.328 trillion, pension funds at Sh1.057 trillion and insurers at Sh1.050 trillion, according to the Treasury's August debt register.
Households hold Sh471.78 billion and non-residents Sh341.85 billion. Bank holdings matter because money parked in government paper is money bankers say is not lent to businesses and households.
On the external side, multilateral lenders now account for Sh3.206 trillion, up Sh14.96 billion in August.
IDA, the World Bank's concessional arm, is the largest lender at Sh1.794 trillion, followed by the African Development Bank at Sh567.89 billion and the IMF at Sh447.33 billion.
Bilateral debt rose Sh18.51 billion to Sh985.69 billion. China remains the largest single government creditor at Sh604.79 billion, followed by France at Sh103.14 billion and Japan at Sh92.23 billion.
Commercial debt slipped to Sh1.537 trillion, including a Sh1.361 trillion Eurobond and Sh161.78 billion in bank loans. Guaranteed debt was Sh70.58 billion, mostly owed to Japan, with Sh9.71 billion relating to Kenya Airways.
The shilling weakened in August, from 129.40 to 129.45 per dollar, 148.91 to 150.35 per euro and 174.01 to 175.40 per pound. The dollar accounts for 54.5 per cent of external debt, the euro 27.0 per cent, the yuan 11.4 per cent and the yen 4.7 per cent.
Cumulative external debt service reached Sh101.57 billion by end-August against a full-year budget of Sh680.38 billion.
August alone accounted for Sh52.08 billion, Sh18.06 billion in principal and Sh34.02 billion in interest.
Domestic interest payments totalled Sh179.10 billion against an annual budget of Sh986.73 billion.
August's domestic interest bill was Sh105.31 billion, of which bonds accounted for Sh99.74 billion and bills Sh5.48 billion.
Net domestic financing stood at Sh435.79 billion against an annual target of Sh897.96 billion, nearly half the allowance used in two months.
The reported figure may understate the burden, analysts say. The IMF has pressed Kenya to include pending bills, securitisation funds and non-guaranteed State corporation loans in its debt definition, a change that would add more than Sh1 trillion to the stock.
"The fund deems the arrears material, highlighting them as significant financial information that could influence the decision of stakeholders like investors and creditors," the IMF said earlier in a technical report.
National Treasury Cabinet Secretary John Mbadi has argued that securitised debt, where future tax revenue is pledged to fund infrastructure, should not count as sovereign debt.
The government has securitised about Sh335 billion in revenue.
The dispute has frozen talks on a new IMF programme after the previous $3.6 billion (Sh468 billion) deal expired in April 2025 without disbursing a final Sh109.8 billion tranche.
Kenya remains deep in sub-investment grade, meaning investors demand a premium to hold its debt. Fitch rates it B- with a stable outlook, S&P B stable and Moody's B3 stable.
Reserves stood at $14.693 billion (Sh1.91 trillion), or 5.9 months of import cover, on October 22, above the CBK's four-month statutory floor.
Controller of Budget Margaret Nyakang'o has warned that debt servicing absorbs 71 per cent of revenue, leaving 29 per cent for salaries, services and development.
"The impact is that we must keep borrowing to stay afloat," she told MPs.
"A wish for us not to borrow may not be feasible at this time."
That is the bind heading into the August 2027 election. Analysts say: borrow more at home and push up rates, cut spending and risk backlash, or raise taxes and repeat 2024.