Kenya domestic debt has reached a record KSh7.14 trillion as of 20 March, reflecting increased reliance on local borrowing amid limited access to external financing.
Data from Central Bank of Kenya shows the figure rose from KSh7.05 trillion in February and KSh6.86 trillion at the end of December 2025, highlighting a sharp rise within a short period.
The pace of growth has drawn attention. It took 13 years for domestic debt to rise from KSh1 trillion to KSh6 trillion, but only 12 months to add the latest trillion.
Between 24 December 2025 and 20 February 2026 alone, domestic debt increased by KSh197.31 billion, averaging more than KSh3 billion per day.
The government has increasingly turned to the domestic market as external financing conditions tighten and repayment obligations remain high. By February 2026, Kenya had already used 87.4% of its full year domestic borrowing target, with nearly half of the financial year still remaining.
Debt structure and rising costs
Treasury bonds account for 81% of the domestic debt stock, standing at KSh5.74 trillion. These are mainly held by commercial banks, pension funds and insurance companies.
Interest rates ranging between 15% and 18% have raised concern among analysts, who argue that the returns favour lenders while increasing pressure on public finances.
Treasury bills are also increasing their share, rising from 15.67% in late December 2025 to 16.22% by February 2026. The growing reliance on short term debt means the government will need to refinance more frequently.
The government maintains that the debt remains sustainable. However, the cost of servicing it continues to rise. Interest payments are projected to reach KSh1.2 trillion in the 2026/27 financial year.
This has fueled concern among taxpayers, as higher debt servicing costs are often linked to increased taxation and reduced spending on public services.
Kenya total public debt is now approaching KSh12.3 trillion, adding to concerns about long term fiscal stability.
Since September 2022, domestic debt has increased by about KSh2.71 trillion, showing a faster pace compared to the previous decade.
Economists warn that continued reliance on domestic borrowing could crowd out private sector lending and slow economic growth if not carefully managed.
