The Treasury’s failure to enact a comprehensive national debt liability management policy has curtailed the strategic deployment of debt reorganisation tools such as prepayments, swaps, and restructuring, a committee of the National Assembly has said.
The National Assembly’s Debt and Privatisation Committee says implementing the policy will allow the National Treasury to plan proactively, reduce refinancing risks, and better align fiscal outcomes with the country's long-term development agenda.
The committee, in a report on the Consolidated Fund Services Fund (CFS) for the Supplementary Budget III, has given the Treasury 60 days to develop and publish a comprehensive National Liability Management Policy.
“The policy should articulate clear guidelines and measurable targets aimed at reducing the debt service burden and enhancing fiscal space,” Njoki Mrembo, the vice-chairperson of the committee said in a report to the House.
The CFS expenditures constitute mandatory money use is a charge to the Consolidated Fund and does not form part of the annual Appropriations Bill.
The CFS expenses include public debt expenditures, pension payments, salary and allowances for independent offices and constitutional commissions, and guaranteed debt payment, among other expenditures.
MPs on Wednesday approved the report on Supplementary III for the financial year 2024/25 that reduces the CFS expenditures by Sh295.28 billion from Sh2.29 trillion to Sh1.99 trillion.
The committee said the reduction is attributed to a decline in public debt service expenditure as there are no changes to other expenditures, such as pensions, guaranteed debt, and salaries and allowances.
“The Sh1.99 trillion CFS expenditures will comprise public debt servicing expenditures (Sh1.75 trillion), pension payments (Sh223.15 billion), salary and allowances (Sh4.08 billion), and guaranteed debt payments and other miscellaneous expenditure (Sh19.7 billion).
“Given that public debt continues to be the largest expenditure under the CFS, this underscores the need for prudent public debt management to ease pressure arising from mandatory expenditures.”
Kenya’s public debt reached Sh11.35 trillion in March 2025 on the back of increased borrowing from the domestic market.
