It’s Time to Restructure Kenya’s Public Debt
Kenya's public debt service repayments coupled with limited revenue growth continue to put pressure to meet creditor obligations..
✨ Key Highlights
Kenya faces a severe fiscal crisis due to poor public debt management, with a remarkable 68% of ordinary tax revenue annually allocated to debt servicing. This financial strain is hindering critical public services and necessitates a radical restructuring of the nation's debt, according to Cuba Houghton, budget financing lead at Bajeti Hub.
- 68% of Kenya's ordinary tax revenue is used for debt servicing, limiting funds for essential services like education and aid to the poor.
- Cuba Houghton, budget financing lead at Bajeti Hub, advocates for bold debt restructuring to address Kenya's fiscal crisis.
- Recent efforts, including the Finance Act 2023, boosted tax revenue by 14%, but debt interest payments surged by 22% over the same period, indicating the inadequacy of current measures.
- Kenya's recent $1.5 billion Eurobond issuance to repay a maturing $2 billion Eurobond highlights piecemeal restructuring efforts.
- Debt restructuring, while complex and carrying risks to credit ratings, offers a pre-emptive solution to avoid default and enable long-term fiscal sustainability.
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Part of the Day's Coverage
Kenyan Institutions Face Financial Shortfalls, Debt, and Audit Over Sh15bn Gap - September 2025
The Metropolitan National Sacco Society has approved a forensic audit after a Sh15 billion loan book asset was revealed to be untraceable, alongside a negative equity position. This action addresses concerns about the Sacco's financial stability. At a national level, Kenya is facing a severe fiscal crisis, with 68% of ordinary tax revenue being allocated to debt servicing, which hinders critical public services. Similarly, the Kenya Wildlife Service (KWS) is seeking to address a Sh12 billion annual conservation funding deficit by proposing an increase in park entry fees. In a related issue, Kenya's pension industry, with Ksh 2.23 trillion in savings, faces significant challenges including overexposure to government securities and a surge in unpaid contributions.
