Treasury CS John Mbadi is under pressure to reduce Kenya’s GDP debt ratio to 55% by 2029, as outlined by Controller of Budget Margaret Nyakango. Current public debt is declining but still exceeds the IMF’s recommended threshold, raising concerns over financial stability. Increased expenditure on debt highlights the need for effective management and transparency from the National Treasury.
Treasury Cabinet Secretary John Mbadi has been tasked by Controller of Budget (COB) Margaret Nyakango to lower Kenya’s GDP debt ratio to 55% by 2029. The directive arises from a review of the 2025 Medium-Term Debt Management Strategy, emphasizing the need for a structured approach to meet this critical benchmark.
Kenya’s public debt has shown a decline, dropping from 71.9% in 2022 to 65.7% as of June 2024. According to the 2025 Budget Policy Statement, projections indicate this ratio could further decrease to 52.5% by 2029, suggesting an ongoing effort to manage the national debt effectively.
Nyakango pointed out that the current debt-to-GDP ratio exceeds the International Monetary Fund’s recommended limit of 50% for developing nations. She stressed that mitigating debt levels must remain a central focus to avoid financial instability.
In December 2024, total public debt in Kenya reached Sh10.93 trillion, with external lenders owed Sh5.06 trillion (46%) and domestic lenders Sh5.87 trillion (54%). The first half of FY 2024/2025 saw expenditure on public debt rise to Ksh 666.34 billion, up from Ksh 597.58 billion in the corresponding period of FY 2023/2024, largely due to repayments of domestic treasury bills and bonds.
Nyakango urged Parliament to compel the National Treasury to disclose measures enacted during FY 2024/25 aimed at reducing short-term debt and managing refinancing risks effectively. She highlighted that the National Treasury faces increased pressure to settle debts quickly while contending with higher interest rates.
The Resource Mobilisation Department at the National Treasury has been tasked to clarify strategies being implemented to improve interest rates and extend debt repayment periods. Such measures are vital in navigating the complex landscape of public financing and economic stability.
The directives issued by the Controller of Budget are critical for the financial health of Kenya. With a declining debt ratio and ongoing reforms, the government aims to meet international standards by 2029. However, proactive debt management and transparency in financial dealings are essential to mitigate risks and ensure sustainable economic growth.
Original Source: www.kenyans.co.ke
