Treasury Secretary John Mbadi has been instructed by Controller of Budget Margaret Nyakango to reduce Kenya’s GDP debt ratio to 55% by 2029. Currently, public debt has decreased from 71.9% to 65.7%, but still exceeds IMF recommendations. Strategies for debt management and revenue reforms are crucial to ensure financial stability.
Treasury Cabinet Secretary John Mbadi has been tasked by the Controller of Budget, Margaret Nyakango, to decrease Kenya’s Gross Domestic Product (GDP) debt ratio to 55% by the year 2029. This directive arises from a recent evaluation of the 2025 Medium-Term Debt Management Strategy. Nyakango emphasized the need for the National Treasury to establish a clear roadmap to meet this debt threshold by the designated time frame.
Nyakango noted that Kenya’s public debt as a percentage of GDP is on a downward trend, having reduced from 71.9% in 2022 to 65.7% by June 2024. Furthermore, the 2025 Budget Policy Statement projects that this ratio will further decrease to 52.5% by 2029. She acknowledged that the current figures exceed the International Monetary Fund’s recommended limit of 50% for developing nations, thus highlighting the urgency for action.
In her review, Nyakango disclosed that Kenya’s public debt reached Sh10.93 trillion in December 2024, with Sh5.06 trillion owed externally and Sh5.87 trillion domestically. During the first half of the fiscal year 2024/2025, public debt expenditures totaled Ksh 666.34 billion, an increase from Ksh 597.58 billion for the corresponding period in the prior year. The rise in expenses is attributed mainly to the settlement of domestic debts involving treasury bills and bonds, which accounted for Ksh 432.83 billion compared to Ksh 355.17 billion previously.
Nyakango advised that Parliament should require the National Treasury to report on efforts made in FY 2024/25 aimed at decreasing short-term debt and alleviating high refinancing risks. The Controller of Budget elaborated that time constraints for settling debts, coupled with rising interest rates, necessitate focused strategies. She also urged the Resource Mobilisation Department at the National Treasury to clarify the measures being implemented to enhance interest rates and extend grace periods for debt repayment.
In summary, Treasury Cabinet Secretary John Mbadi faces a formidable challenge to reduce Kenya’s GDP debt ratio to 55% by 2029, as imposed by Controller of Budget Margaret Nyakango. While public debt shows signs of decreasing, further efforts are essential to meet not only national goals but also international recommendations. This situation calls for effective debt management and revenue strategies to mitigate financial instability.
Original Source: www.kenyans.co.ke
