Rising debt puts Kenya at risk of default, says MP Nyoro

Kiharu Member of Parliament, Ndindi Nyoro, has warned that Kenya is heading toward a debt crisis, with the country’s mounting public debt reaching Sh11 trillion.

Speaking at the Institute of Public Finance’s annual budget review on Tuesday, Nyoro expressed concern that Kenya’s rising debt burden could soon push the nation into the ranks of African countries that have defaulted on their loans.

Kenya’s debt has soared from just under Sh2 trillion over the past twelve years to its current level, raising alarms across the political and economic landscape.

According to the Central Bank of Kenya, the country’s total debt as of December 2024 stood at Sh10.9 trillion.

Nearly 54 percent of the debt is owed to domestic lenders, while 46 percent is owed to international creditors.

Nyoro, who formerly chaired the Budget and Appropriations Committee, emphasized the dangers of renegotiating the country’s debt terms, warning that such a move could have disastrous effects on the country’s financial reputation.

"Any indication that we are going to default or are unable to service our loans is more catastrophic to our economy,” Nyoro stated, urging caution in dealing with the country’s creditors.

As the government prepares the 2025/2026 budget, Nyoro highlighted that Sh4.2 trillion is expected to be spent, with a significant portion, around Sh1 trillion, allocated to servicing the national debt.

Of this amount, Sh750 billion will go towards domestic debt payments, while Sh200 billion will be used for external debt obligations.

Nyoro also pointed to the impact of increased taxes since 2022, claiming that the government’s efforts to raise revenue through tax hikes have hurt the economy.

He argued that higher taxes distort economic decisions, discouraging spending and investment.

"If I was planning to buy a car, I would withhold that decision because the government is coming for my money," Nyoro said, stressing the adverse effect on consumer behavior.