Kenya to Borrow Sh1.15 Trillion as National Debt Stocks Surge

The National Treasury has outlined an extensive borrowing plan for the current fiscal year, seeking to raise Sh1.15 trillion to cover the government’s budget deficit. Treasury Principal Secretary Chris Kiptoo disclosed the figures on Tuesday, highlighting the intensifying pressure on the country’s fiscal space.

According to the PS, the government is looking to secure Sh925 billion from the domestic market. This heavy reliance on local lenders comes at a time when the domestic debt stock has already reached Sh7.1 trillion. The strategy places the government in direct competition with the private sector for capital from local banks and institutional investors.

On the international front, the Treasury plans to borrow Sh229 billion in external debt. This component of the strategy is being watched closely, as external debt currently stands at Sh5.7 trillion. The balance between domestic and foreign borrowing remains a critical point of concern for analysts monitoring the country’s long-term sustainability.

PS Kiptoo noted that the government has already moved significantly toward these targets. He stated that Sh800 billion has been borrowed within the current fiscal year alone. This rapid pace of accumulation reflects the urgent need to fund recurrent expenditure and ongoing infrastructure commitments under the administration of President Ruto.

The total public debt portfolio is now split between the Sh7.1 trillion owed to local creditors and the Sh5.7 trillion owed to foreign lenders. The disparity highlights a shift toward domestic markets to mitigate risks associated with currency fluctuations, although this often results in higher interest rates for the state.

Critics of the borrowing spree have raised concerns about the crowding out of local businesses. When the government borrows heavily from the domestic market, it often drives up interest rates, making it difficult for the locals to access affordable credit for business expansion or personal development.

Infrastructure projects across the country, which remain a priority for President Ruto, continue to require substantial capital injections. Many of these projects were initiated with the expectation of high economic returns, but the immediate reality is a ballooning debt service bill that consumes a large portion of tax revenue.

The Treasury has defended its position, suggesting that the borrowing is necessary to keep essential services running and to complete critical works. PS Kiptoo's briefing indicates that the government is fully aware of the debt ceiling and is attempting to manage the deficit through a mix of commercial and multilateral loans.

For the construction sector, these figures are particularly relevant. Much of the external debt is tied to specific development projects. If the government fails to hit its borrowing targets or if the cost of debt becomes too high, many pending bills owed to contractors could remain unpaid, further stalling the local industry.

The PS did not provide a specific breakdown of which international lenders are being targeted for the remaining Sh229 billion. However, Kenya has recently leaned on the International Monetary Fund and the World Bank for concessional funding, which carries lower interest rates than commercial Eurobonds.

As the fiscal year progresses, the focus remains on whether the Treasury can maintain this level of borrowing without triggering a wider economic crisis. The locals remain wary of new taxes that are often introduced to help service these growing obligations, creating a tense atmosphere between the taxpayer and the state.