NAIROBI, Kenya, Jan 5 – The government expects Kenya’s debt-to-GDP ratio to ease slightly to 60.6 percent by 2030, according to the draft 2026 Budget Policy Statement (BPS).
The projected ratio would be lower than the estimated 63.2 percent this year but will remain above the 55 percent benchmark considered sustainable under Kenya’s debt framework.
“Under overall public debt, the Present Value (PV) of total public debt-to-GDP ratio remained above the 55.0 percent benchmark, signalling a breach of the sustainability threshold,” the BPS states in part.
“The present value of public debt was 63.8 percent of GDP in September 2025 and is projected to decline to 60.6 percent by 2030.”
In December last year, the World Bank warned about Kenya’s rising public debt, which had climbed to 68 percent of GDP, citing the high cost of debt servicing that consumes more than a third of government revenue and crowds out critical development spending.
The lender also flagged weakening tax performance, noting that tax collections had declined from 16.2 percent of GDP in the 2016/17 financial year to just above 14 percent.
“This shrinking fiscal space limits investment in infrastructure, education, and health—the very foundations of productivity growth and job creation,” the World Bank said.
It added that despite large public investments, productivity growth remained stagnant between 2011 and 2019, while job creation has been concentrated in low-productivity informal sectors. Real wages have dropped by more than 13 percent since 2019.
“Fiscal reforms must therefore promote not only stabilisation but also growth and jobs,” the Bank said.
Kenya’s debt challenges have been compounded by public opposition to new taxes, with proposed increases previously withdrawn following widespread backlash. In 2024, President William Ruto was forced to suspend the Finance Bill after protests that turned deadly.
To reduce debt vulnerabilities, the BPS says the government will continue implementing its fiscal consolidation programme while optimising the financing mix in favour of concessional borrowing to fund capital investments.
“Additionally, a steady and strong inflow of remittances and a favourable outlook for exports will play a major role in supporting external debt sustainability,” the document states.
“The Government will further be proactive in public debt management by exploring various Liability Management Operations (LMOs) aimed at extending the maturity of existing debt to reduce immediate financial pressure and manage cash flows more effectively.”
