Inside Kenya's Sh13 trillion debt bomb: Ruto says he borrowed less, treasury data says otherwise

National Treasury Cabinet Secretary John Mbadi when he appeared before the National Assembly’s Trade committee at Bunge Towers in Nairobi on July 21, 2026. [Elvis Ogina, Standard]

Kenya’s public debt crossed the Sh13 trillion mark in June, Treasury data shows, with the country’s fiscal watchdog and the International Monetary Fund warning that rising refinancing needs are squeezing public finances even as President William Ruto insists his administration has slowed borrowing and stabilised the economy.

The National Treasury’s June 2026 Public Debt Bulletin put total public and publicly guaranteed debt at Sh13.120.87 trillion as of end-June, 68.5 per cent of GDP, well above the 55 per cent legal ceiling.

Domestic debt stood at Sh7,327.20 trillion, while external debt reached Sh5,793.66 trillion.

The composition was 55.8 per cent domestic and 44.2 per cent external.

Controller of Budget Margaret Nyakang’o, in her report for the 2025/26 financial year, flagged the surging debt stock and called on the Treasury to urgently reduce borrowing.

She warned that rising debt, persistent budget deficits, high debt-service costs and growing refinancing needs were putting increased pressure on public finances.

Refinancing risk is the danger that a government cannot roll over, or repay, maturing debt without borrowing more money, often at higher interest rates.

For Kenya, this is not theoretical; the Controller of Budget warned.

The Treasury spent Sh1.72 trillion in principal and interest payments in the 2024/25 financial year alone. With every Sh10 that the Kenya Revenue Authority collects in taxes, a growing share is consumed by debt repayment.

The IMF has repeatedly warned that Kenya’s debt is at high risk of distress. In November 2024, IMF Communications Director Julie Kozack said: “We assess Kenya to have a high risk of debt distress... any new borrowing should be considered within the context of a comprehensive fiscal strategy to reduce debt vulnerabilities.”

On Thursday Kozack told reporters in Washington that global public debt had climbed to nearly 100 per cent of world GDP, the highest since World War II. “Public debt is now nearly 100 per cent of GDP,” she said. “And we also see that public debt is set to climb further globally.”

More critically for Kenya, she highlighted the liquidity squeeze facing low-income countries.

“When we look at debt levels, especially in low-income countries, including in sub-Saharan Africa, we see that debt levels have actually declined and stabilised,” Kozack said. “Where we see the pressures is more on the liquidity side, debt service and the availability of financing.” She pointed to reduced official development assistance and rising advanced-economy yields as compounding factors.

Speaking in Kericho County on Friday, Ruto rejected the warning signs, telling a rally that his administration had “stabilised our economy, slowed debt accumulation, lowered inflation and stabilised the exchange rate.”

He claimed  debt had increased by only 27 per cent under his watch, “as opposed to three- and five-fold increases in the past two administrations respectively.”

“We are now confident that Kenya’s journey towards a first-world economy is on a sound footing,” Ruto said, adding that he is “ready for the 2027 election contest” and that the debate would be about “ideas, issues and transformation programmes.”

The numbers, however, tell a more complicated story. Public debt stood at Sh8.76 trillion when Ruto took office in September 2022 and has since risen by roughly Sh4.25 trillion, a 48 per cent increase.

Between 2022/23 and 2025/26, the government raised nearly Sh3.6 trillion in net borrowing for deficit financing.

Despite the warnings, Kenya is going back to the well.

The Treasury has lined up about $400 million (Sh51.8 billion) in emergency financing from the World Bank to address risks including an Ebola outbreak and El Niño-related disruptions.

The funding will come through the bank’s Rapid Response Option, allowing Kenya to redirect up to 10 per cent of undisbursed financing.

In February, Kenya issued a $2.25 billion (Sh290 billion) sovereign bond split between a $900 million note at 7.9 per cent and a $1.35 billion note at 8.7 per cent largely to refinance maturing debt.

The government has also secured a Sh97.09 billion World Bank loan for development projects and a Sh29 billion credit for education.

Efforts to secure a new IMF facility, however, have stalled. Talks are in limbo after the Fund raised concerns about Sh335 billion in revenue-backed financing instruments that Kenya has not classified as public debt. The IMF wants future tax revenues pledged to infrastructure projects to be counted as debt, complicating the government’s borrowing strategy.

Economists warn that the combination of high debt service, weak revenue mobilisation and election-year spending pressures could push Kenya into a vicious cycle.

Debt service is consuming about Sh2.6 trillion annually, competing directly with healthcare, education and infrastructure spending.

Kozack’s advice to policymakers was blunt: “We are continuing to encourage them to really look to have credible medium-term fiscal consolidation plans. We’re not in a situation where fiscal consolidation needs to take place overnight. But having a clear, laid-out plan and strategy for how deficits and debt are going to come down is very important.”

For the country, the clock is ticking. With elections in August 2027 and debt service absorbing a growing share of revenue, the margin for error is shrinking. As Ruto tours the country launching roads and electricity projects, the Sh13 trillion question is whether his “sound footing” narrative can withstand the refinancing wave that is building, analysts say.

Debt Burden

Total public debt: Sh13.12 trillion as at June 2026

Debt-to-GDP ratio: 68.5 per cent

Legal debt ceiling: 55 per cent of GDP

Domestic debt: Sh7.33 trillion

External debt: Sh5.79 trillion

Domestic share: 55.8 per cent

External share: 44.2 per cent

Debt in September 2022: Sh8.76 trillion

Increase under Ruto: Sh4.25 trillion, or 48 per cent

Net borrowing for deficit financing: Nearly Sh3.6 trillion between 2022/23 and 2025/26

Debt principal and interest paid in 2024/25: Sh1.72 trillion

Current annual debt service: About Sh2.6 trillion

February 2026 Eurobond: $2.25 billion (about Sh290 billion)

World Bank emergency financing lined up: $400 million (about Sh51.8 billion)

Other World Bank loans: Sh97.09 billion for development projects and Sh29 billion for education

Revenue-backed financing under IMF dispute: Sh335 billion

2027 election: August 2027