Ruto’s Ksh303B Borrowing Pushes Public Debt to Ksh10.5 Trillion, Set to Reach Ksh13 Trillion by 2028
Kenya’s debt has soared to an all-time high of Ksh10.5 trillion, following the acquisition of Ksh303.2 billion in new loans by President William Ruto’s administration for the fiscal year ending June 2024.
The national debt increased by Ksh303.2 billion in just three months, emphasizing the government’s persistent dependence on external financing to support essential projects. This surge in borrowing is alarming, especially with forecasts estimating a debt of Ksh13.11 trillion by 2028.
This week, Parliament received a Treasury report detailing that the loans were obtained from both multilateral and bilateral lenders to fund initiatives in vital sectors such as health, energy, and micro, small, and medium enterprises (MSMEs). While these loans are essential for progress, they exacerbate a debt load that is nearing unsustainable levels.
According to the report, external debt comprises 48.9 percent of the total debt, amounting to Ksh5.171 trillion, whereas domestic debt accounts for Ksh5.410 trillion.
Although the debt-to-GDP ratio slightly improved to 65.7 percent from 72 percent, this change is mainly due to the strengthening of the Kenyan shilling against major currencies, providing only temporary relief in the face of an impending fiscal crisis. The report also reveals a reduction in government-guaranteed debt from Ksh170.2 billion in June 2023 to Ksh100.2 billion in June 2024, primarily attributed to the restructuring of Kenya Airways’ debt.
Among the loans acquired, a Ksh20.6 billion loan from the International Development Association (IDA) is earmarked for enhancing primary healthcare services. Additionally, another IDA loan of Ksh39.7 billion aims to boost transparency and efficiency in public finance while enhancing labor market competitiveness. Although beneficial, these initiatives put added strain on a budget already burdened by previous debts.
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The government’s ambitious energy expansion plan has led to the signing of a Ksh5.8 billion loan with the IDA to integrate renewable energy and strengthen Kenya Power’s energy trading capacity. While this green energy initiative aligns with global sustainability goals, the repayment terms—starting in 2029 and lasting until 2058—raise concerns about the long-term financial implications.
A substantial Ksh109.8 billion loan from the International Bank for Reconstruction and Development (IBRD) will support projects aimed at achieving fiscal sustainability and fostering resilient growth. Meanwhile, the African Development Bank has provided a Ksh14.8 billion loan for high-voltage network enhancements, indicating a move towards ensuring a reliable green electricity supply. These loans underscore the government’s strategy of leveraging external financing to promote infrastructural development.
Nonetheless, the increasing debt coincides with President Ruto’s caution that borrowing will be essential for government operations, especially after the proposed 2024 Finance Bill faced significant opposition.
The bill intended to raise Ksh350 billion through tax reforms but was rejected amid widespread protests, forcing the government to resort to further borrowing to cover financial shortfalls.
With debt expected to reach Ksh13.11 trillion by the 2027/2028 fiscal year, concerns about Kenya’s financial stability are escalating. The nation faces a challenging task in balancing the need for development while managing its growing debt responsibilities.
Ruto’s Ksh303B Borrowing Pushes Public Debt to Ksh10.5 Trillion, Set to Reach Ksh13 Trillion by 2028
