KDRTV NEWS – Nairobi: Kenya’s domestic debt burden has ballooned by a staggering KSh 777 billion in under a year, underscoring the government’s deepening reliance on internal borrowing to fund its operations and plug persistent budget deficits. Data from the Central Bank of Kenya (CBK) reveals that the country’s gross domestic debt hit KSh 6.187 trillion as of May 16, 2025—up from KSh 5.410 trillion on June 28, 2024.
https://www.centralbank.go.ke/uploads/weekly_bulletin/758129893_Weekly%20CBK%20Bulletin%20May%2023%202025.pdf
Treasury bonds continue to dominate the debt landscape, amounting to KSh 5.03 trillion and representing over 84% of all domestic securities. Treasury bills rose sharply to KSh 949.09 billion, reflecting a shift toward short-term borrowing. Meanwhile, the Central Bank overdraft nearly doubled from KSh 61.02 billion to KSh 93.21 billion, indicating growing cash flow pressures within the government.
While Treasury bonds slightly declined as a percentage of total domestic debt—from 85.52% to 81.36%—the share of Treasury bills grew significantly, from 11.38% to 15.35%, signaling a pivot to faster maturing instruments. Banking institutions remained the largest holders of domestic debt at 45.07%, though this was a dip from the previous year. Pension funds, too, saw a reduction in their holdings, dropping to 28.76% from 33.42%. Interestingly, the “Other Investors” category—including custodial and nominee accounts—almost doubled their share from 7.13% to 13.03%, hinting at rising private sector appetite amid high interest rates and tighter monetary policy.
Despite mounting debt concerns, the government maintains that domestic borrowing is a strategic tool to manage liquidity and reduce dependency on foreign debt, which carries exchange rate risks.
Meanwhile, the Kenyan shilling remained relatively stable, trading at KSh 129.23 per US dollar, supported by improved foreign reserves now standing at KSh 1.33 trillion. The CBK also reported a healthy import cover of 4.6 months, and the money market remained liquid with commercial banks holding KSh 21.2 billion in excess reserves.
