Treasury to spend Sh 1 trillion on debt payment

With the mounting pressure on public finances, Kenya's National Treasury is set to dedicate a record Sh 1 trillion toward debt servicing in the upcoming fiscal year.

This strategic shift is detailed in the 2025/26 budget published ahead of Finance Minister John Mbadi's House presentation.

Kenya's total debt has risen to around 66 percent, significantly higher than the sustainable threshold of 55 percent.

In the wake of last year's nationwide protests against heavy taxation, the government this time round has opted not to introduce new levies in the new budget.

The Sh 1 trillion allocation is meant for principal and interest payments due in the 2025/26 fiscal cycle. This includes a combination of domestic debt such as Treasury bills and bonds and external obligations, including Eurobonds and bilateral loans.

Experts caution that revenue raising without new taxes depends heavily on the government's success in broadening the tax net and enforcing compliance across Kenya's retail and informal sectors.

Failure to achieve these reforms may lead to persistent budgetary shortfalls and ad‑hoc mid‑year adjustments

The government’s strategy depends on smoother debt durations, tighter cost controls, and stronger revenue engines.

As Finance Minister Mbadi prepares to update Parliament, all eyes will be on whether Kenya can manage this delicate balancing act without sacrificing essential public services.