Kenya’s Debt Up a Record Sh1.56 Trillion

In President William Ruto’s first year in office, Kenya borrowed the largest amount of money in a single year, leading to a breach of the debt ceiling due to shortfalls in tax revenue and increased repayment obligations.

New data from the Treasury reveals that Kenya’s total debt has increased to Sh1.56 trillion for the financial year ending in June, surpassing the Sh10 trillion mark by Sh189.53 billion. At the end of the last financial year, Kenya had a gross total debt of Sh10.19 trillion, which was 18.08% higher than the previous year under former President Uhuru Kenyatta. In June, lawmakers voted to convert the numerical debt ceiling to an anchor of 55% of GDP, giving the Treasury five years to comply. 

Despite Dr Ruto’s promise to reduce borrowing, the increase in gross debt occurred during his first nine months in charge. During his stint, the administration made it clear that they would reduce borrowing. However, according to data from the Treasury, almost 92% of the new gross debt was contracted in his regime – a revelation that has left many feeling uneasy about his ability to deliver on the promises mentioned beforehand.

Dr Ruto had promised not to make the nation dependent on debt from any country and to implement policies that would increase tax compliance and national savings. Nonetheless, the Ruto administration’s efforts to consolidate finances were hindered by a softening economy and underperformance in tax revenue. Foreign borrowing accounted for two-thirds of the increase in gross debt, with Kenya borrowing an additional Sh1.06 trillion from foreign creditors to reach a total of Sh5.36 trillion.

“I am looking forward to the day, soon enough, when we borrow from the savings of the people of Kenya to run our development instead of borrowing from other countries, and that is what holds the future for us,” Dr Ruto had said last September.