Kenya will not cease borrowing amid a significant debt of Sh11.2 trillion and a debt-to-GDP ratio of 65.7%. Treasury CS John Mbadi cited the necessity of borrowing for government operations and assured of improved fund utilization. Concerns over the management and urgency of loans were raised during discussions in the Senate Finance and Budget Committee.
Kenya’s Treasury Cabinet Secretary John Mbadi announced that the government will continue borrowing despite the national debt reaching Sh11.2 trillion and a debt-to-GDP ratio of 65.7%, which exceeds the sustainable threshold of 55%. In a Senate Finance and Budget Committee meeting, he emphasized that borrowing is crucial to support government operations amidst a mounting debt crisis.
Senator Mohamed Faki questioned the government’s use of these loans and raised concerns about why Kenya’s debt continues to rise. He stated, “Kenyans are wondering why we are still sinking deeper into debt while there are lingering questions about how these funds are being spent.”
The government’s financial situation has been deteriorated by last year’s protests, which resulted in a significant revenue loss of Sh346 billion after a controversial finance bill was withdrawn. Although trust in President William Ruto’s government appears low, Mbadi assured that efforts are underway to maximize the utilization of borrowed funds to ensure they meet repayment obligations.
The fiscal policy for the year ending June 2026 includes plans for borrowing Sh684.2 billion domestically and Sh146.8 billion externally to address budget deficits. This reflects a shift toward domestic borrowing as reduced IMF funding has led the government to lower external borrowing targets.
The Kenya Revenue Authority (KRA) faces significant pressure, needing to collect Sh1.07 trillion in just three months—averaging Sh267.8 billion monthly, far exceeding its current collection capability of Sh175.46 billion. Between July 2024 and February 2025, KRA accrued Sh1.4 trillion, achieving 56.7% of its updated annual goal.
Concerns were also raised regarding a Sh42 billion loan taken shortly after the last election, highlighting questions about the urgency of such borrowing. Mbadi has enlisted the Auditor-General’s office to help formulate a debt reduction strategy and has called for all ministries to focus on priority areas to prevent unutilized funds from going to waste.
In response to Kakamega Senator Boni Khalwale regarding Sh29.9 billion allocated for devolved functions, Mbadi noted that he would need to review a detailed report before answering. He also urged timely resolutions to ensure that issues between governors and MPs do not compromise service delivery within counties.
The Treasury continues to borrow amidst a substantial debt of Sh11.2 trillion, with a debt-to-GDP ratio above the sustainability threshold. Despite concerns raised by senators regarding the management of these funds, Cabinet Secretary Mbadi insists on the necessity of borrowing to sustain government operations. Key strategies include heightened domestic borrowing and a focus on effectively utilizing resources. However, the ongoing pressure on revenue collection and the implications of political decisions pose challenges to fiscal stability.
Original Source: eastleighvoice.co.ke
