The Controller of Budget (CoB), Dr. Margaret Nyakang’o, has warned that the Kenya risks falling deeper into a debt trap due to expensive borrowing and poor project coordination.
Speaking before the National Assembly’s Committee on Public Debt and Privatization, chaired by Mbalambala MP Shurie Omar, Dr. Nyakang’o painted a bleak picture of the nation’s finances, describing a “vicious cycle of debt accumulation” that is limiting fiscal space and hindering effective budget execution.
She revealed that Kenya’s public debt had reached Ksh 12.29 trillion by December 2025, equivalent to 67.8% of GDP, way above the statutory ceiling of 55%. A major concern, she noted, is the rising cost of servicing the debt.
“Half of the debt payments are just financial costs, not reducing the principal. We’re only paying interest,” Dr. Nyakang’o said, adding that interest payments alone now total Ksh 464.49 billion, making up 54% of total debt service.
She also warned of dangerous borrowing, where the government takes on new loans to pay off existing ones. Billions of shillings have been lost to commitment fees charges on loans that remain unused due to delayed or poorly prepared projects.
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“We find ourselves in a debt trap where we sign for loans when we’re not ready. Treasury mobilizes funds without ensuring implementers are prepared,” she explained.
The mounting debt burden has led to a liquidity crisis, forcing the government to ration cash and delay payments, including salaries. Dr. Nyakang’o also criticized the use of Article 223 of the Constitution to finance previously rejected expenditures, calling it a “back door” that undermines fiscal discipline.
To restore stability, the CoB recommended shifting towards concessional borrowing, improving debt transparency, and strengthening oversight.
“We must undertake evidence-based analysis before taking on new debt to ensure it’s in the country’s best interest,” she urged.
The committee decided to launch a separate inquiry into commitment fees, signaling their intent to hold accountable those responsible for the escalating financial losses.
By Obegi Malack
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