MPs slash mandatory spending by Sh295 billion, demand debt plan in 60 days
The National Assembly’s Debt and Privatisation Committee, in a report on the Consolidated Fund Services (CFS) budget under Supplementary Budget III, noted that the absence of such a policy has hindered Kenya’s ability to take advantage of key tools like prepayments, debt swaps, and restructuring.
The National Assembly has directed the National Treasury to urgently develop a clear national plan for managing Kenya’s public debt, warning that continued inaction is exposing the country to financial risks.
Lawmakers want the Treasury to come up with a comprehensive National Liability Management Policy within 60 days to help reduce the debt burden and align fiscal planning with the country’s development goals.
The National Assembly’s Debt and Privatisation Committee, in a report on the Consolidated Fund Services (CFS) budget under Supplementary Budget III, noted that the absence of such a policy has hindered Kenya’s ability to take advantage of key tools like prepayments, debt swaps, and restructuring.
“The policy should articulate clear guidelines and measurable targets aimed at reducing the debt service burden and enhancing fiscal space,” said Njoki Mrembo, the committee’s vice-chairperson, in her report to Parliament.
The CFS covers mandatory government payments such as public debt servicing, pensions, salaries and allowances for constitutional commissions and independent offices, and guaranteed debt. These expenditures are charged directly to the Consolidated Fund and are not part of the annual Appropriations Bill.
The House approved the committee’s report, which reflects a reduction in the CFS budget for the 2024/25 financial year by Sh295.28 billion — from Sh2.29 trillion to Sh1.99 trillion.
The decline, the committee explained, is due to lower public debt servicing costs, while other components such as pensions, guaranteed debt, and wages remain unchanged.
According to the report, the revised Sh1.99 trillion CFS allocation includes Sh1.75 trillion for public debt repayment, Sh223.15 billion for pensions, Sh4.08 billion for salaries and allowances, and Sh19.7 billion for guaranteed debt and other related payments.
“Given that public debt continues to be the largest expenditure under the CFS, this underscores the need for prudent public debt management to ease pressure arising from mandatory expenditures,” the committee stated.
Kenya’s public debt stood at Sh11.35 trillion as of March 2025, largely due to increased borrowing from the domestic market. Legislators are now pushing for a long-term policy to contain this trend and avoid jeopardising future fiscal stability.
