Kenya's public debt payments rose by Sh68.7 billion over the six months to December 2024, amid a growing weight of domestic interest, the Controller of Budget (CoB) has revealed.
The CoB’s latest report on national government budget implementation shows that Treasury spent Sh666.3 billion on public debt service during the period, compared to Sh597.6 billion spent between July and December 2023.
“The increase is attributed mainly to the settlement of domestic debt relating to Treasury bills and bonds, which stood at Sh432.83 billion compared to Sh355.17 billion paid in a similar financial year 2023/24 period,” the CoB notes.
Interest payments on domestic debt alone jumped 2.6 times to Sh325.7 billion and accounted for the increase in debt service burden.
“There was an overall growth in CFS payments over the period, and this is attributed mainly to an increase in interest payments on domestic debt (excluding overdraft) from Sh125.08 billion in the first six months of the financial year 2023/24 to Sh325.72 billion in the financial year 2024/25,” the report adds.
The growth in domestic interest payments happened as the total stock of domestic debt grew from Sh5.41 trillion in June 2024 to Sh5.87 trillion by the end of December.
Over the six months, the CoB report notes, the government borrowed a total of Sh487.14 billion in new domestic loans, while Sh27.6 billion in domestic principal loans were repaid.
“As of December 31, 2024, the public debt stock stood at Sh10.93 trillion, comprising Sh5.06 trillion owed to external lenders (46 percent) and Sh5.87 trillion due to domestic lenders (54 percent). The public debt stock increased by three percent from Sh10.58 trillion as of June 30, 2024,” the CoB notes.
Between June and December 2024, external debts declined by 0.2 percent as the Kenyan Shilling recorded a marginal strengthening that wiped Sh9.35 billion debt off the books.
The foreign exchange rate between the shilling and the US Dollar strengthened from 129.527 units in June to 129.2927 units in December. On the other hand, the domestic debt stock grew by 8 percent due to increased borrowing from the domestic market.
The government plans to pay debts totaling Sh1.91 trillion during the current fiscal year (ending June 2025), comprised of Sh809.57 billion for principal and Sh1.01 trillion for interest payments.
External debt payments are expected to consume Sh590.6 billion (out of which Sh259.9 billion is interest), while domestic debt payments are projected to cost Sh1.32 trillion (Sh749.97 billion as interest payments).
During the six months to December 2024, the government paid Sh231.29 billion worth of external debts, out of which Sh100.89 billion were interests, Sh553.67 million in commitment fees, and Sh977.5 million in penalties.
