As of June 2025, Kenya’s total public debt stood at KES 11.8 trillion, an equivalent of about 67.8% of the nation’s Gross Domestic Product (GDP), more than half of this being domestic debt raised through instruments such as Treasury bonds and treasury bills, while the remainder is external, and it is sourced largely from multilateral lenders on repayable terms. While this structure reflects a deliberate effort to contain borrowing costs, it also exposes the economy to several risks, particularly refinancing pressure from short-term domestic debt and vulnerability to exchange rate fluctuations on the external side.
A review of the government’s 2024 Medium-Term Debt Management Strategy reveals both challenges and adaptive measures. The plan had aimed to source 45% of net financing from external creditors, but actual disbursements fell short, leading to heavier reliance on domestic borrowing translating to 83% versus the targeted 55%. This shift increased exposure to local interest rates and shortened the overall maturity profile of the debt. However, a notable success during this period was the proactive management of external bond repayments. In early 2025, the government issued a new bond and used part of the proceeds to buy back debt due in 2027 which helped to smooth out the repayment schedule and easing immediate refinancing pressures.
Kenya’s Debt Sustainability Outlook
In terms of debt sustainability, Kenya finds itself in a shaky but manageable position. An official analysis confirms that public debt remains sustainable, but at the same time it carries a high risk of distress. The core concern is that the present value of debt remains above the national benchmark of 55% of GDP and it is not projected to fall below this threshold until after 2029. Currently, debt service has been consuming a huge share of the government revenue and export earnings, hence limiting the fiscal space available for development spending and reducing the economy’s ability to absorb external shocks.
Looking ahead, the path to sustainable debt requires an integrated approach. This means rebalancing the debt portfolio toward longer-term instruments, prioritizing concessional external loans, actively managing liability profiles to avoid repayment spikes, and staying committed to fiscal consolidation to reduce borrowing needs. Ultimately, debt sustainability hinges not only on how Kenya borrows but also on how it grows. Strengthening the export base, boosting domestic revenue, and fostering inclusive economic expansion will enhance the country’s capacity to service its obligations and secure a stable fiscal future.
