NAIROBI, Kenya, Feb 14 – Kenya’s public debt management has been severely impacted by high interest rates both globally and in the domestic market, according to the Medium-Term Debt Management Strategy (MTDM) tabled in Parliament on Thursday.
The report warns that elevated interest rates are expected to push total interest payments beyond Sh1 trillion in the 2024/25 financial year, driven by a tight monetary policy environment that has raised borrowing costs for government securities.
“This consumes a very high proportion of the revenue collected and hence poses a significant constraint to fiscal consolidation efforts,” the report states.
It further highlights that global market volatility and interest rate fluctuations have complicated the timing and cost of Kenya’s debt management operations.
The MTDM identifies several challenges affecting Kenya’s debt strategy, including limited understanding among stakeholders, sovereign credit rating downgrade, and weak debt sustainability analysis.
As of June 2024, Kenya’s total guaranteed debt stock stood at Sh10.58 trillion, comprising external debt (Sh5.17 trillion) and domestic debt (Sh5.41 trillion).
With rising interest rates and mounting debt obligations, the report underscores the need for urgent reforms to strengthen debt sustainability and fiscal management.
