Treasury Cabinet Secretary John Mbadi has admitted that Kenya is struggling to meet its debt obligations.
Speaking on Friday, March 7, Mbadi painted a grim picture of Kenya’s debt burden, which has now ballooned to Ksh11 trillion. The CS explained that of the total amount owed, Ksh5.83 trillion is domestic debt, while Ksh5.19 trillion is external debt.
“We have reached a point, where we are struggling to pay our debts and it is a catch-22 situation. We are between a rock and a hard place. For us to clear our bills, we should be taxing you more but we can't tax you more. So what do we do? We have to struggle to pay these debts. Attempt to tax Kenyans more backfires and even kills the economy, but you also have loans that you must pay. We owe Ksh11 trillion,” he stated.
The Treasury CS added, "Of this Ksh 11 trillion, Ksh 5.83 trillion is domestic debt, while Ksh 5.19 trillion is external debt. For the external debt, out of the Ksh 5.19 trillion, Ksh 2.83 trillion is multilateral, with 62% of it owed to the World Bank, this is a cheap loan. However, Ksh 1.09 trillion is owed to bilateral lenders, with China accounting for Ksh 666 billion, making it the largest lender. Then, we have what is called commercial borrowing, which is the worst. Commercial borrowing stands at Ksh 1.17 trillion, out of which Eurobond accounts for Ksh 835 billion. The remaining portion consists of syndicated loans, including those from TDB and Afreximbank, with interest rates of 12% to 13%. These loans were largely taken between 2016 and 2019. Don't ask me what was done with that money because it is mind-boggling."
CS Mbadi noted that the loans were taken around the same time, hence the pressure on repayment.
Read More
The Treasury CS was explaining to Kenyans in Mombasa why, despite low interest rates by banks, stability of the Kenyan shilling, and inflation rate reducing, Kenyans were still feeling the pressure on the cost of living.
On Thursday, Mbadi announced that the cost of living had improved after the country’s inflation rate dropped to 3.5% in February 2025, down from 6.3% in February 2024.
Citing a report from the Kenya National Bureau of Statistics (KNBS), the CS noted that the reduction in inflation was driven by a significant decline in the prices of key household commodities.
The KNBS report showed that maize grain, wheat flour, sugar, fuel and electricity all saw notable price drops.
For instance, the price of 1 kg of loose maize grain fell by 8.7%, while 2 kg of wheat flour saw a 17.5% reduction. The cost of 1 kg of sugar also dropped significantly by 16.8%.
Fuel prices, a key determinant of overall consumer costs, also decreased. A litre of kerosene dropped by 21.5%, petrol by 14.4%, and diesel by 14.5%.
The report also indicated that electricity costs followed suit, with 200 KWh reducing by 16.6% and 50 KWh by 10.7%.
Additionally, the KNBS report highlighted that different regions experienced varying degrees of price reductions.
Central and Coast regions recorded the highest drop in maize grain prices, with a decrease of 18.6% and 11.2%, respectively.
The cost of 2 kg of wheat flour in Central Kenya fell by 22.7%, while sugar prices in North Eastern and Nyanza dropped by up to 25.1%.
On the other hand, certain regions experienced slight price increases for select items.
For example, the cost of 1 kg of loose maize grain in North Eastern rose by 19.5%, and the price of 1 litre of cooking oil increased by 5% nationwide.
The government attributed this improvement to a number of government policy measures and interventions including monetary policy measures, stabilization of energy prices, access to credit and funding, and social protection measures.
"The price reductions underscore the positive impact of government interventions and market stabilization efforts, ultimately enhancing affordability of goods and services while easing the financial burden on households across the country," Mbadi said.
