NAIROBI, Kenya, Mar 31 – Kenya’s fiscal outlook has come under renewed pressure after Controller of Budget Margaret Nyakang’o warned of a deepening debt cycle driven by costly borrowing and weak project coordination.
Appearing before Parliament, Nyakang’o said public debt had risen to Sh12.29 trillion as of December 2025, equivalent to 67.8 percent of GDP—well above the legal threshold.
She raised concern over the rising cost of servicing the debt, noting that more than half of repayments are going toward interest rather than reducing the principal amount.
Lawmakers were told that interest payments alone now account for a significant share of total debt servicing, highlighting mounting pressure on public finances.
The Controller of Budget also flagged what she termed “hazardous borrowing,” where new loans are taken to repay existing debt, further compounding the burden.
She attributed part of the problem to poor coordination between the National Treasury and implementing agencies, which has led to delays in project execution and increased costs, including commitment fees on undisbursed loans.
The growing debt burden has also contributed to cash flow constraints, with delays reported in government payments.
Nyakang’o urged a shift toward concessional borrowing, improved transparency and stronger oversight to restore fiscal stability.
Parliament is now expected to probe the rising cost of unused loans as part of efforts to tighten public debt management.
