The Controller of Budget, Margaret Nyakango, has instructed Treasury Cabinet Secretary John Mbadi to lower Kenya’s debt-to-GDP ratio to 55% by 2029. Despite current declines in debt levels, significant reforms are necessary to meet this target and ensure financial stability. The report highlights Kenya’s growing public debt stock and increased fiscal expenditure on debt servicing, urging the National Treasury to adopt effective management strategies.
Treasury Cabinet Secretary John Mbadi has received directives from the Controller of Budget (COB), Margaret Nyakango, to reduce Kenya’s Gross Domestic Product (GDP) debt ratio to 55% by the year 2029. The COB’s report, which evaluates the 2025 Medium-Term Debt Management Strategy, emphasizes the need for the National Treasury to establish a strategic roadmap to achieve this debt benchmark.
As reported, Kenya’s nominal public debt is on a declining trajectory, decreasing from 71.9% in 2022 to 65.7% in June 2024. Nyakango indicated that, according to the 2025 Budget Policy Statement, this ratio is projected to fall to 52.5% by 2029. However, it remains significantly above the International Monetary Fund’s recommended threshold of 50% for developing nations.
Nyakango has stressed that maintaining a more favorable debt level should be prioritized. The COB has also urged the National Treasury to implement effective strategies centered on debt management and reforms in revenue collection to avert potential financial instability.
In her findings, Nyakango revealed that Kenya’s public debt stock was recorded at Sh10.93 trillion in December 2024, with Sh5.06 trillion owed to external lenders and Sh5.87 trillion owed to domestic creditors. During the first half of Fiscal Year 2024/2025, public debt expenditure reached Ksh 666.34 billion, an increase from Ksh 597.58 billion in the same fiscal period the previous year.
This increase in debt service is attributed to the settlement of domestic debt associated with treasury bills and bonds, which amounted to Ksh 432.83 billion compared to Ksh 355.17 billion in FY 2023/2024. Nyakango further recommended that Parliament require the National Treasury to outline the actions taken in FY 2024/25 aimed at reducing short-term debt and addressing high refinancing risks.
The COB indicated that the National Treasury faces a compressed timeline for debt settlement, accompanied by heightened interest rates. Furthermore, Nyakango noted that the Resource Mobilisation Department at the National Treasury must clarify the measures being taken to enhance interest rates and extend repayment grace periods.
In conclusion, the demands set forth by the Controller of Budget emphasize the urgency for the National Treasury to manage Kenya’s public debt effectively. As the country seeks to lower its debt-to-GDP ratio to a manageable 55% by 2029, implementing strategic measures in revenue collection and debt management remains crucial to ensuring fiscal stability and compliance with international benchmarks.
Original Source: www.kenyans.co.ke
