Gov't to borrow Ksh.923 billion to finance 2025/26 budget

The public debt which has steadily increased for over a decade now, is set to increase further in the next financial year.

The government announced plans to borrow Ksh.923.2 billion to finance the ambitious Ksh.4.29 trillion budget, with the amount increasing from the previous estimate of Ksh.876 billion in the initial Treasury estimates.

The amount will comprise, a Ksh.287 billion loan from external lenders and another Ksh.635 billion facility from the local market.

This comes as the soaring public debt reached another high, with the Central Bank of Kenya (CBK) figures showing the total public debt stock as of march 2025 at Ksh.11.3 trillion.

Of this, Ksh.6.1 trillion is domestically borrowed and the balance of Ksh.5.2 trillion constituting the foreign debt.

“We face constraints on account of public debt accumulation. Progressively, our debt-carrying capacity has narrowed…this calls for prudence and discipline on how we manage and take on new debt,” Treasury Cabinet Secretary John Mbadi said.

The government intends to spend at least Ksh.1.1 trillion on interest on debt. Of this Ksh.851 billion will go to finance interest on domestic debt and Ksh.246.3 billion for the external debt interest. This is excluding the repayments on the principal amount or redemptions in the same period.

Budget committee Chairman Sam Atandi said: “We are moving to a debt deficit of 8% during the former regime to 4.74% during this financial year. This is a great improvement.”

The new realities come as the Kenya Kwanza government under President William Ruto borrowed a whooping Ksh.2.6trillion as of March this year, in the close to 3 years it has been in power. This has taken the debt stock to a new record.

Meanwhile, the government is currently conducting a comprehensive audit of its public debt, initiated by the National Treasury and overseen by the Auditor General, in order to differentiate the true debt from the odious one.