Treasury Cabinet Secretary John Mbadi is tasked with reducing Kenya’s GDP debt ratio to 55% by 2029 as requested by Controller of Budget, Margaret Nyakango. Current nominal public debt shows a decreasing trend, dropping from 71.9% to 65.7%. The COB outlined the need for better debt management strategies to cope with rising interest rates and refinancing risks.
Treasury Cabinet Secretary John Mbadi faces pressure from the Controller of Budget, Margaret Nyakango, to lower Kenya’s Gross Domestic Product (GDP) debt ratio to 55% by the year 2029. In her analysis of the 2025 Medium-Term Debt Management Strategy, Nyakango indicated the necessity for the National Treasury to outline a roadmap that achieves this debt target.
Nyakango reported a decline in Kenya’s total nominal public debt, dropping from 71.9% in 2022 to 65.7% by June 2024. The 2025 Budget Policy Statement anticipates a further reduction to 52.5% by 2029. However, this remains above the International Monetary Fund’s recommended threshold of 50% for developing nations, necessitating a focus on improving the country’s overall debt levels.
According to the COB, the National Treasury must implement strategies aimed at enhancing debt management and reforming revenue collection to avert potential financial instability. In December 2024, the public debt stock reached Sh10.93 trillion, divided between Sh5.06 trillion owed externally (46%) and Sh5.87 trillion to domestic lenders (54%).
In the early months of FY 2024/2025, total public debt expenditure was Ksh 666.34 billion, higher than the Ksh 597.58 billion from the same period in FY 2023/2024. The increase is attributed to domestic debt payments related to treasury bills and bonds, which amounted to Ksh 432.83 billion, compared to Ksh 355.17 billion in the previous fiscal year.
Nyakango urged Parliament to mandate the National Treasury to disclose specific actions taken in FY 2024/2025 aimed at reducing short-term debt and alleviating high refinancing risks. The COB emphasized that the National Treasury is under pressure to settle debts more swiftly while facing elevated interest rates, underscoring the importance of effective financial strategies.
In conclusion, the Controller of Budget has set forth significant demands for the National Treasury to realign Kenya’s debt levels to a more manageable ratio by 2029. With the country’s public debt continuing to decline, the emphasis on effective debt management and revenue reforms proves critical to averting financial instability. Achieving this more favorable debt ratio remains a priority for both the Treasury and the Parliament as they navigate the current economic landscape.
Original Source: www.kenyans.co.ke
