(NAIROBI, KENYA) – Kenya will spend nearly four out of every five shillings of ordinary revenue on debt repayments in the financial year ending June 2027, according to the National Treasury.
Total debt service is projected at KES 2.30 trillion ($17.8 billion / £13.6 billion), equal to 79.8% of ordinary revenue. This is up from 72.4% last financial year.
The share of revenue going to debt repayments will rise by 7.4 percentage points in a single year.
The Treasury projects total debt service will rise by about 23% to KES 2.301 trillion ($17.8 billion / £13.6 billion) in the year to June 2027, from KES 1.875 trillion ($14.5 billion / £11.1 billion) last year.
The increase of KES 426.2 billion ($3.3 billion / £2.5 billion) means a larger share of taxes will go towards servicing past borrowing.
This adds pressure on the budget as the government balances debt obligations against other spending needs.
“Public debt service is projected to remain a significant component of the Government’s expenditure over the medium term,” the Treasury said in its latest Annual Public Debt Management Report.
Interest payments will account for the biggest share of the burden.
The interest bill will rise to KES 1.295 trillion ($10.0 billion / £7.6 billion) from KES 1.075 trillion ($8.3 billion / £6.3 billion) in the year ended June.
Interest will absorb 44.9% of projected ordinary revenue of KES 2.884 trillion ($22.3 billion / £17.0 billion).
Domestic interest payments are projected to jump to KES 1.027 trillion ($7.9 billion / £6.1 billion) from KES 862.7 billion ($6.7 billion / £5.1 billion).
Interest on external debt will rise to KES 267.5 billion ($2.1 billion / £1.6 billion) from KES 211.8 billion ($1.6 billion / £1.3 billion).
The Treasury will also redeem domestic Treasury bonds of KES 463.5 billion ($3.6 billion / £2.7 billion) and KES 542.9 billion ($4.2 billion / £3.2 billion) to meet external principal repayments by June 2027.
The squeeze is expected to persist beyond next year.
Debt service is projected to rise to KES 2.535 trillion ($19.6 billion / £15.0 billion) in 2027/28 and KES 2.562 trillion ($19.8 billion / £15.2 billion) in 2028/29.
As a share of ordinary revenue, the burden is forecast at 79% in 2027/28 and 72% in 2028/29. It is expected to ease to 64.7% in 2029/30.
The Treasury attributes the decline to “the expected improvement in revenue performance and the moderation of debt service obligations”.
The projections show a worsening share of revenue available for other spending.
Debt servicing consumed 47.9% of government revenue in 2021/22. This rose to 58.9% in 2022/23 and 69.1% in 2023/24.
The ratio climbed further to 71.2% in 2024/25 and 72.3% in 2025/26, according to the report.
The growing burden has persisted despite efforts to spread out repayments and reduce refinancing risk.
During the year ended June 2026, the government issued a $2.25 billion (KES 292 billion / £1.7 billion) Eurobond. It also retired part of its 2028 and 2032 Eurobond obligations through a tender offer.
Domestic bond switches and buybacks amounted to KES 66.8 billion ($517 million / £395 million) during the year.
The Treasury said these operations were aimed at “reducing refinancing risk and smoothing the public debt redemption profile”.
However, the report shows refinancing vulnerabilities remain, particularly in the domestic debt portfolio.
Debt falling due within one year stood at 12.7% of total debt, above the 11.9% target.
The average maturity of domestic debt fell to seven years against a target of 8.3 years.
The Treasury attributed the higher refinancing risk to “higher issuance of short-term domestic securities”.
Kenya’s public debt stood at KES 13.12 trillion ($101.5 billion / £77.6 billion) at the end of June 2026. This is equal to 70.4% of gross domestic product.
The Treasury considers the debt sustainable under its baseline assumptions, but acknowledges significant risks.
“Kenya’s overall and external public debt remains sustainable but at high risk of distress,” the report said.
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