The National Treasury projects that debt repayments will absorb almost four-fifths of the shillings collected as taxes and other ordinary revenue in the financial year ending June 30, 2027.
Total debt service for that period is estimated at KSh2.30 trillion, which equals 79.8 per cent of ordinary revenue, up from 72.4 per cent in the previous financial year.
The share of revenue devoted to debt service therefore rises by 7.4 percentage points in a single year, while the Treasury notes a 23 per cent increase from KSh1.875 trillion last year to KSh2.301 trillion.
Interest payments form the largest part of the burden, climbing to KSh1.295 trillion from KSh1.075 trillion, and will take 44.90 per cent of the projected ordinary revenue of KSh2.884 trillion.
Domestic interest is expected to grow to KSh1.027 trillion from KSh862.7 billion, and interest on external debt to rise to KSh267.5 billion from KSh211.8 billion.
The Treasury plans to redeem domestic Treasury bonds worth KSh463.5 billion and an additional KSh542.9 billion to meet external principal repayments by June 2027.
Debt service is forecast to reach KSh2.535 trillion in 2027/28 and KSh2.562 trillion in 2028/29, representing 79 per cent and 72 per cent of ordinary revenue respectively, before easing to 64.7 per cent in 2029/30.
The Treasury attributes the later easing to an expected improvement in revenue performance and a moderation of debt-service obligations.
Debt-service costs have risen from 47.9 per cent of government revenue in 2021/22 to 72.3 per cent in 2025/26.
In the year to June 2026 the government issued a $2.25 billion Eurobond (about KSh292 billion) and retired part of its 2028 and 2032 Eurobond obligations through a tender offer, while domestic bond switches and buybacks totalled KSh66.8 billion.
Treasury officials say these actions were intended to lower refinancing risk and smooth the public-debt redemption profile.
Nonetheless, refinancing risk remains elevated, with debt due within one year accounting for 12.7 per cent of total debt, above the 11.9 per cent target, and the average maturity of domestic debt falling to seven years against a target of 8.3 years; higher short-term issuance is cited as the cause.
Kenya’s public debt stood at KSh13.12 trillion at the end of June 2026, equal to 70.4 per cent of gross domestic product, and the Treasury judges the debt sustainable under baseline assumptions but notes significant risks.
The report states “Kenya’s overall and external public debt remains sustainable but at high risk of distress,” and adds that “Public debt service is projected to remain a significant component of the Government's expenditure over the medium term.”
