Controller of Budget warns Kenya trapped in borrowing cycle as debt hits Sh12.82tn

NAIROBI, Kenya, Jul 29 – Kenya’s public debt has climbed to Sh12.82 trillion, with loan repayments now consuming 71 per cent of all government revenue, leaving just 29 per cent to fund salaries, public services and development projects, Controller of Budget Margaret Nyakang’o has told Parliament. Appearing before the National Assembly’s Public Petitions Committee on Tuesday, Nyakang’o warned that the country’s mounting debt burden has severely constrained the government’s fiscal space, making it increasingly difficult to finance essential services without resorting to additional borrowing. She said Kenya’s debt portfolio is now made up of approximately 60 per cent domestic debt and 40 per cent external debt, with debt servicing absorbing nearly three-quarters of all revenue collected.

“The impact of that over-borrowing is that up to 71 per cent of the revenues that we collect goes to loan repayment. That leaves us with only 29 per cent to undertake all the other expenditures, including recurrent and development spending,” she told MPs. Nyakang’o said calls by many Kenyans, particularly young people, for the government to stop borrowing altogether were understandable but difficult to achieve under the current fiscal realities.

“The impact is that we must keep borrowing in order to stay afloat. A wish for us not to borrow may not be feasible at this time,” she said. Instead, she advocated gradual fiscal consolidation, urging the government to narrow its financing gap by raising revenue while cutting expenditure.

“What we need is to reduce our spending while increasing revenue so that the financing gap becomes smaller over time,” she said. Her remarks came in response to concerns raised by petitioners who questioned the sustainability of Kenya’s debt and urged tighter controls on public borrowing. Nyakang’o also disclosed that her office had sought an explanation from the National Treasury over expenditure on International Monetary Fund (IMF) on-lent loans, after detecting spending that exceeded Parliament-approved allocations.

“We have already communicated with the National Treasury and we are waiting for a response because they brought additional requisitions for the same expenditure, yet it was not provided for in the budget,” she said. The Controller of Budget further revealed that none of Kenya’s forty-seven county budgets had passed the legal compliance …