Kenya’s total public debt has climbed to KSh 11.97 trillion as of August 2025, representing 67.4 percent of the country’s Gross Domestic Product (GDP). This was disclosed in the National Treasury’s Monthly Debt Bulletin, which shows that the debt rose by KSh 196 billion compared to July and by KSh 1.23 trillion from the same period last year.
The increase was mainly driven by new domestic borrowing and fresh loan disbursements from multilateral development partners. The debt portfolio consists of KSh 6.57 trillion in domestic obligations, accounting for 54.9 percent, and KSh 5.40 trillion in external debt, making up 45.1 percent of the total stock.
According to the Treasury, the Kenya shilling remained relatively stable against the US dollar during the month, averaging KSh 129.24 per dollar, which helped cushion the cost of servicing external loans. However, the currency weakened slightly against other major currencies such as the euro, yen, and yuan.
In its breakdown, the Treasury report indicated that external debt rose by KSh 18 billion, reflecting new disbursements from both multilateral and bilateral lenders.
Bilateral debt increased by KSh 8.1 billion to KSh 985.6 billion, with China maintaining its position as Kenya’s largest bilateral creditor at KSh 612.5 billion. France followed with KSh 98.7 billion, while Japan’s exposure stood at KSh 86.7 billion.
Multilateral obligations, on the other hand, expanded by KSh 19 billion to KSh 3.03 trillion, driven by inflows from the World Bank’s International Development Association (IDA), which accounted for KSh 1.65 trillion, the African Development Bank (AfDB) with KSh 546 billion, and the International Monetary Fund (IMF) with KSh 477 billion.
The stock of commercial debt decreased slightly by KSh 9.8 billion to KSh 1.31 trillion, while guaranteed debt loans backed by the government for state-owned enterprises rose marginally to KSh 81.5 billion.
During August, external debt service payments totaled KSh 48.4 billion, consisting of KSh 20.6 billion in principal repayments and KSh 27.8 billion in interest payments.
Meanwhile, the pace of domestic borrowing accelerated sharply during the same period, rising by KSh 178.3 billion to reach KSh 6.57 trillion. The surge was mainly due to higher issuances of Treasury bonds and Treasury bills as the government sought to plug its budget deficit.
Treasury bond holdings increased by KSh 187 billion to KSh 5.37 trillion, while Treasury bills rose modestly by KSh 3 billion to KSh 1.06 trillion.
In terms of investors, commercial banks remained the largest holders of domestic debt, with their exposure increasing from KSh 2.73 trillion in July to KSh 2.81 trillion in August — a jump of KSh 77.6 billion. Pension funds followed with holdings rising from KSh 1.85 trillion to KSh 1.89 trillion, while insurance companies increased their investments by KSh 12.2 billion to reach KSh 479 billion. Other investors, including parastatals and individuals, collectively held KSh 1.39 trillion, up from KSh 1.34 trillion in July.
The Treasury said that government securities worth KSh 186 billion were put up for sale in August, but the auctions attracted strong investor interest with bids totaling KSh 614 billion. Successful bids amounted to KSh 361 billion, while redemptions repayments for maturing securities stood at KSh 175 billion.
Overall, net domestic financing for the month was KSh 235 billion, against a full-year target of KSh 613 billion, suggesting the government is on track to meet its borrowing goals if the current trend continues.
Analysts say the continued growth in Kenya’s public debt reflects both the country’s need to finance development projects and the rising cost of debt servicing. With interest payments taking a larger share of government revenue, concerns persist over the sustainability of the country’s debt and the impact on future fiscal flexibility.
The National Treasury has maintained that Kenya’s debt remains sustainable, emphasizing that borrowing has been focused on productive investments such as infrastructure and energy projects. However, experts warn that unless revenue collection improves and expenditure is tightly controlled, the country could face growing pressure on its fiscal space.
