Kenya’s loan burden laid bare as Treasury CS briefs Budget Committee

Kenya’s loan burden laid bare as Treasury CS briefs Budget Committee

𝐓𝐡𝐮𝐫𝐬𝐝𝐚𝐲, 𝐌𝐚𝐫𝐜𝐡 𝟐𝟕, 𝟐𝟎𝟐𝟓.

The Budget and Appropriations Committee, led by the Chairperson Hon. Samuel Atandi (Alego Usonga), has commenced public hearings on the Division of Revenue Bill 2025. Kicking off the sessions, National Treasury and Economic Planning Cabinet Secretary, Hon. John Mbadi, presented a projected shareable revenue of Kshs. 2.835 trillion for the FY 2025/26. This includes Kshs. 2.419 trillion for the National Government, Kshs. 405.1 billion for County Governments, and Kshs. 10.6 billion for the Equalization Fund.

Beyond revenue allocation, the Cabinet Secretary also outlined Kenya’s debt obligations, detailing loans maturing in the coming years.

"In external loans, out of the Kshs. 5.09 trillion that we had as of January this year, Kshs. 2.83 trillion is in multilaterals, which are basically concessional loans. But there is Kshs. 1.09 trillion under bilateral loans. However, Kshs. 665 billion out of this is owed to China, which has helped us do a lot of infrastructure, so we should not condemn them. But unlike our domestic debts and Eurobond loans, this is a loan you don't refinance," said Hon. Mbadi.

The CS further noted that as of January, Kenya had Kshs. 1.7 trillion in commercial loans, including Kshs. 800 billion in Eurobonds and Kshs. 325 billion in syndicated loans, which he termed as the most expensive, with interest rates between 12% and 14%.

On the Eurobond, Hon. Mbadi detailed upcoming repayment obligations:

"There is USD 900 million to be paid in 2027, USD 1 billion in 2028, USD 1.5 billion in 2031, USD 1.2 billion in 2032, and USD 1 billion in 2034. The only outstanding bond maturing beyond that period is the USD 1.5 billion due in 2048."

Equalization Fund and County Revenue Concerns

Committee members questioned whether the Equalization Fund was effectively addressing historical marginalization and promoting equitable development. The discussion also highlighted concerns over the declining allocation to counties, which dropped to 14.29% in 2025, down from 14.61% in 2024.

In the afternoon session, the Institute of Certified Public Accountants of Kenya (ICPAK) and Bajeti Hub jointly presented their views, advocating for an increase in county allocations to Kshs. 417.4 billion, in line with the Commission on Revenue Allocation (CRA) recommendation.

The Institute of Economic Affairs-Kenya called on Parliament to expedite the review and approval of Auditor-General reports, arguing that this would enhance transparency and ensure fair revenue distribution. Meanwhile, the Institute of Public Finance proposed that the Bill should include provisions guaranteeing county disbursements remain unaffected by national revenue shortfalls and debt obligations, preventing service delivery disruptions.

As the hearings continue, stakeholders will be keen to see how Parliament balances revenue allocation with the rising national debt burden.