Controller of Budget Dr. Margaret Nyakang’o has raised the alarm over Kenya’s surging domestic borrowing and escalating debt servicing obligations, urging the National Treasury to urgently implement fiscal consolidation measures to avert a looming debt crisis.
Appearing before the National Assembly Committee on Public Debt and Privatisation, Dr. Nyakang’o disclosed that the country’s public debt stock had risen by 7 per cent, increasing from KSh 10.58 trillion as of June 30, 2024, to KSh 11.36 trillion by March 31, 2025.
Notably, domestic debt recorded a sharp 13 per cent growth over the nine-month period, climbing to KSh 6.12 trillion, while external debt edged up by just 1 per cent.“The high and growing domestic debt has significantly raised debt servicing costs,” she told lawmakers, warning that the trend poses a fiscal risk and increases the likelihood of future defaults if not urgently addressed.
Dr. Nyakang’o revealed that the government allocated KSh 2.04 trillion for debt servicing in the current financial year. However, only KSh 1.20 trillion had been spent by the end of March 2025, leaving concerns over the government’s ability to meet its remaining debt obligations in the final quarter of the fiscal year.
To rein in the fiscal deficit, the Controller of Budget is urging the government to reduce non-essential expenditure and limit domestic borrowing, instead opting for concessional loans that carry lower interest rates as opposed to costly commercial loans.
Further, she recommended that the government prioritize payment of pensions and gratuities, noting that at least KSh 23 billion in retirement benefits remained unpaid from the previous financial year and was rolled over into the current one.
Members of Parliament expressed concern over continued delays in remitting pension contributions to retirement schemes, warning that the trend is undermining public trust and creating financial hardship for retirees.
