Budget Controller Margaret Nyakang’o has warned the government against excessive borrowing for development projects lacking direct economic or social benefits. In the first quarter of fiscal year 2025/26, Sh507.98 billion was used for debt repayments, up from Sh325.52 billion the previous year. Her report shows public debt rose to Sh12.04 trillion.
In her report on national budget implementation for the first quarter of fiscal year 2025/26, Margaret Nyakang’o, the Budget Controller, highlights how rising borrowing is straining the country's finances. This increase funds a Sh4.69 trillion budget but particularly affects projects that do not deliver measurable benefits to citizens.
Debt repayments reached Sh507.98 billion, representing 27% of revised estimates, compared to 17% in 2024/25. The rise stems from principal repayments totaling Sh251.80 billion, up from Sh95.54 billion.
“To improve financial impacts and ensure debt sustainability, borrowing should be fully directed to development projects with measurable economic and social benefits,” Nyakang’o stated.
For this year, the government has allocated Sh1.90 trillion for public debt servicing, up from Sh1.74 trillion, with Sh1.10 trillion for interest. In the period, external debt repayments were Sh213.09 billion (principal Sh141.10 billion and interest Sh71.68 billion), while domestic debt stood at Sh294.89 billion (principal Sh110.70 billion and interest Sh184.20 billion).
Public debt grew by 2% from Sh11.80 trillion as of June 30, 2025, to Sh12.04 trillion by September 30, 2025. External debt fell by 2%, but domestic debt rose by 5%, now at Sh5.39 trillion (45%) and Sh6.65 trillion (55%).
Nyakang’o noted that the escalating debt is consuming a large portion of domestic revenues, necessitating commercial loans for salaries and projects. “Recurrent expenditures should be controlled through expenditure rationalization, increasing efficiency, and strengthening public financial management controls,” she added.
The government aims to finance the budget through tax revenues, domestic and external loans, as well as grants and other domestic revenues.
