Budget Controller Margaret Nyakang’o has warned that Kenya risks defaulting on Sh3.32 trillion in foreign debt due within a year without urgent action. She said proposals to cut spending and boost revenue have been ignored by Treasury officials. This could undermine funding for health, education and security services.
Budget Controller Margaret Nyakang’o issued the warning before the National Assembly’s Public Debt Committee. She noted that public debt stood at Sh12.3 trillion as of December 31, 2025, forcing the government to borrow more domestically at high costs.
"A large debt repayment amount increases financial risks and short-term pressure," Dr Nyakang’o said. She added that reliance on short-term loans exposes the government to repeated refinancing risks.
The government has delayed payments on Sh53.6 billion in guarantees, raising doubts about its repayment capacity. The Kenyan shilling’s depreciation against major currencies has also raised external debt servicing costs.
Auditor General Nancy Gathungu’s report shows the government paid Sh6.6 billion in unused loan commitment fees from 2020/21 to 2023/24. This has hampered essential services and development projects.
