Building on last year’s pattern, the National Treasury and the Central Bank of Kenya (CBK) are again planning to reopen older bonds when raising new domestic debt on the back of predetermined interest rates amid increased borrowing needs.
The government’s gross financing requirement for the 2025/2026 fiscal year is estimated at KES 1.5 trillion, equivalent to 8% of the country’s GDP. This comprises KES 901 billion to finance the budgetary deficit and KES 646.3 billion to refinance maturing domestic and external debt obligations.
The exchequer’s net financing requirement for the current fiscal year is KES 901 billion, translating to 4.7% of GDP. This will be financed through external funding of KES 287.4 billion, equivalent to 28% of the net financing requirement, and domestic funding of KES 613.6 billion, equivalent to 72% of the fiscal debt.
“The net domestic financing requirements for FY 2025/2026 are KSh 613.5 billion. This comprises a net domestic borrowing through government securities issuance of KES 634.8 billion and privatization proceeds of KES 149.0 billion, partially offset by domestic loan repayments of KES 1.1 billion and accounts payable adjustments of KES 181.0 billion, “
Treasury’s 2025 annual borrowing plan
The finance ministry plans to use treasury bonds as the primary instrument for sourcing domestic funding. Fixed-rate bonds with maturities of 2, 5, 10, 15, 20, and 25 years will be issued, alongside infrastructure bonds to boost domestic financing. Additionally, tap sales will be leveraged on recently issued instruments to bolster liquidity and investor participation.
The annual borrowing framework aims to minimize loan costs by maintaining a steady, well-structured yield curve and fostering ongoing investor confidence, while meeting the domestic borrowing objective.
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