By Anne Nyambura
The Office of the Controller of Budget (CoB) has sounded the alarm over Kenya’s rising public debt, warning that increasing debt repayment obligations are limiting resources for key government programs.
Appearing before the National Assembly’s Liaisons Committee, Controller of Budget Dr. Margaret Nyakang’o revealed that as of December 31, 2024, the country’s public debt stock had surged to Ksh 10.93 trillion, exceeding the debt ceiling to above 65.7 percent of GDP. She cautioned that domestic borrowing, intended to boost economic stability, has instead eroded the gains made by the strengthening of the shilling.
Dr. Nyakang’o advised the government to prioritize project readiness before borrowing, warning that premature debt commitments could lead to financial inefficiencies and increased economic pressure.
The Controller of Budget also raised concerns over Ksh 1.3 trillion withdrawals, which she claims were made outside the automated system designed to track public funds for accountability. The revelation has sparked questions over transparency and the effectiveness of existing financial oversight mechanisms.
As she provided insights into the National Treasury’s proposed Medium-Term Debt Strategy, Dr. Nyakang’o criticized Kenya’s domestic borrowing practices, arguing that they have failed to improve the country’s debt management framework. She further pointed out that interest payments on existing loans have surpassed the principal amounts, worsening the debt situation.
In response, lawmakers questioned whether Kenya could ever become debt-free and sought clarification on whether the Housing Fund and Social Health Insurance Fund (SHIF) fall under the CoB’s oversight.
To curb the rising debt burden, the Controller of Budget proposed several key measures, including, shifting from short-term borrowing to long-term loans to ease repayment pressure.
Ensuring all borrowed funds are linked to specific projects to prevent diversion of funds.
Additionally she proposed broadening the revenue base to reduce dependency on debt financing and enhancing transparency in loan agreements and ensuring full public disclosure of borrowing terms.
The National Assembly’s Liaisons Committee is currently reviewing the Budget Policy Statement, which will shape future fiscal policies and debt management strategies.
She has urged Parliament and the Treasury to take urgent action in ensuring prudent borrowing, fiscal accountability, and long-term sustainability in managing the country’s financial obligations.
