NTA Raises Alarm Over Kenya’s KSh13 Trillion Debt and Growing Cost to Taxpayers
By Gedion Nzyoki -
Nairobi, Kenya | August 13, 2026 — Kenya’s public debt has climbed to KSh13.013 trillion, raising serious concerns over the growing share of government revenue being consumed by debt repayments and what this means for taxpayers, businesses and the delivery of essential public services.
Speaking on Thursday afternoon, the National Taxpayers Association (NTA), through its Chief Executive Officer Patrick Nyangweso, warned that the country’s growing reliance on domestic borrowing could place further pressure on private-sector credit, economic growth and future tax collections.
The concerns were raised during a Coalition Meeting on the National Debt Burden and Domestic Resource Mobilization held at the Iconic MAA Hotel in Nairobi. The meeting brought together representatives from government institutions, oversight bodies, civil society, academia, the private and informal sectors, youth groups and the media.
Domestic Debt Accounts for More Than Half of Total Debt
According to the latest National Treasury data cited by the NTA, Kenya provisionally ended the 2025/26 financial year with KSh13.013 trillion in public and publicly guaranteed debt.
The figure comprises approximately KSh7.329 trillion in domestic debt and KSh5.685 trillion in external debt.
Domestic debt therefore accounts for about 56.3 per cent of the total debt stock, while external debt represents approximately 43.7 per cent. The reported debt-to-GDP ratio stands at approximately 68.5 per cent.
The NTA said the size and composition of the debt stock now require greater public scrutiny, particularly as the government increasingly turns to the domestic market to finance its budget deficit.
Government Borrowing Rises by Nearly KSh1.2 Trillion
Kenya’s total debt increased from approximately KSh11.814 trillion to KSh13.013 trillion during the 2025/26 financial year, representing an increase of nearly KSh1.2 trillion in a single financial year.
Domestic debt accounted for the largest share of the increase, rising by approximately KSh1.003 trillion, while external debt increased by about KSh196 billion.
As a result, domestic borrowing accounted for approximately 84 per cent of the annual increase in total debt.
At the detailed May 2026 position, Treasury bonds stood at approximately KSh5.944 trillion, while Treasury bills amounted to about KSh1.107 trillion.
The NTA said the bond-to-bill ratio of approximately 84:16 reflects an effort by the government to rely more on longer-term borrowing while managing short-term refinancing risks.
However, the association warned that increased domestic borrowing could have consequences beyond the government’s balance sheet.
“The government borrows heavily from the domestic market to finance the deficit. Financial institutions allocate more resources to public securities. Credit available to businesses becomes more constrained or expensive,” the NTA said.
How Domestic Borrowing Could Affect Businesses and Jobs
The NTA warned that when banks and other financial institutions commit more funds to government securities, businesses could face reduced access to credit or higher borrowing costs.
This could affect private investment, business expansion and employment, with potential consequences for the growth of the tax base.
The association said this could create a cycle in which weaker economic activity leads to lower-than-expected revenue, forcing the government to borrow more to cover fiscal gaps.
The NTA also cited concerns raised by the International Monetary Fund over the growing link between government debt and bank balance sheets in parts of sub-Saharan Africa.
It argued that domestic debt should therefore receive the same level of public and parliamentary scrutiny traditionally applied to major external borrowing.
“Domestic debt may be denominated in shillings, but its consequences are very real for taxpayers, businesses, pensioners and the wider financial system,” the NTA said.
Kenya Spent KSh1.7 Trillion Servicing Debt
The growing debt burden is also reflected in the cost of servicing government loans. In the 2024/25 financial year, Kenya spent approximately KSh1.722 trillion on public debt service.
That was equivalent to about 71.2 per cent of the KSh2.42 trillion collected in ordinary revenue during the period. Interest payments alone amounted to approximately KSh987.5 billion, representing about 40.8 per cent of ordinary revenue.
In simple terms, for every KSh100 collected in ordinary revenue, approximately KSh41 was equivalent to interest payments, while about KSh71 was equivalent to reported total debt service.
The NTA said the figures help explain why Kenyans may continue to experience pressure on public services even when government revenue collection increases.
“The problem is not simply that Kenya collects too little. It is that a very large share of what Kenya collects is already committed before it can finance current public priorities,” the association said.
What the Debt Burden Could Mean for Public Services
The association warned that high debt-service obligations can place pressure on funds available for essential government programmes.
Among the areas it identified were county transfers, development expenditure, school capitation, healthcare financing, infrastructure projects and payments to government suppliers.
Delayed payments can also affect businesses that rely on government contracts, while reduced development spending could slow the implementation of infrastructure projects.
"These are not merely accounting consequences. They affect patients seeking treatment, children attending school, small businesses awaiting government payments, farmers needing infrastructure and young people looking for employment,” the NTA said.
The association said the debt debate should therefore not be treated as an issue confined to economists and government officials, arguing that its effects can ultimately be felt in households and businesses across the country.
NTA Warns Against Putting More Pressure on Taxpayers
Kenya is pursuing measures aimed at increasing domestic revenue, including improved tax administration, broader tax compliance, rationalisation of exemptions and efforts to capture economic activity within the informal and digital economies.
The Medium-Term Revenue Strategy targets raising the revenue-to-GDP ratio to approximately 20 per cent by the end of the 2026/27 financial year, from 14.3 per cent in 2022/23.
The NTA said increasing revenue is necessary for the government to finance public services and reduce reliance on borrowing. However, it warned against repeatedly placing a heavier tax burden on citizens who are already compliant.
“Domestic resource mobilisation cannot succeed through tax measures alone,” the association said.
It called for a fair and predictable tax system, stronger action against tax evasion and illicit financial flows, efficient public expenditure, transparent debt management and credible control of fiscal deficits.
The association also said citizens are more likely to support taxation when they can see clear improvements in public services.
Kenya Risks Entering a Revenue-Debt Cycle
The NTA warned that Kenya risks entering what it described as a “revenue-debt treadmill.”
Under this scenario, the government collects more revenue, but a large portion is absorbed by debt service and other existing obligations. The government then continues borrowing to finance development and recurrent expenditure, creating new interest obligations and additional pressure on future revenue.
Heavy domestic borrowing could further weaken private investment and economic activity, making it harder to expand the tax base.
The NTA said breaking this cycle will require more than improving the Kenya Revenue Authority’s ability to collect taxes.
It will also require stronger public confidence in how government revenue is spent.
“People are more willing to contribute where taxation is fair, expenditure is transparent and public institutions can demonstrate that revenue produces tangible results,” the association said.
Concern Over Debt Inherited by Future Generations
The NTA also raised concerns over intergenerational equity, arguing that current borrowing should provide tangible benefits to future taxpayers.
Borrowing to finance productive infrastructure such as roads, water systems, energy projects and educational facilities can be justified where the assets continue benefiting future generations.
However, the association warned against using long-term borrowing to finance recurrent expenditure, incomplete projects, inflated procurement costs, cost overruns or refinancing that fails to improve the country’s debt position.
“Young Kenyans should not inherit large repayment obligations without receiving corresponding assets, services and economic opportunities,” the NTA said.
NTA Calls for Borrowers to Be Held Accountable
The association wants greater transparency in government borrowing and expenditure.
It said Kenyans should be able to follow the trail of borrowed money from the original loan agreement through budget allocation, procurement, payment and project implementation to the eventual public benefit.
“Citizens should be able to trace borrowing from the loan agreement to the budget allocation, procurement contract, payment, physical output and public benefit,” the NTA said.
It also called for stronger action against waste, corruption, project proliferation and procurement irregularities.
According to the association, demands for Kenyans to pay more taxes must be matched by visible efforts to ensure that public money is spent efficiently.
NTA Pushes for a New Fiscal Compact
The coalition meeting is expected to generate recommendations on how Kenya can manage its debt while maintaining essential public services and creating conditions for economic growth.
The NTA said the focus should be on practical measures covering both sides of the fiscal equation: how the government raises money and how it spends and accounts for that money.
The association called for fiscal consolidation that protects healthcare, education, social protection and high-impact development programmes.
It also said every additional shilling borrowed should be linked to measurable economic, social or institutional benefits.
“Kenya cannot tax its way out of debt without reforming how it borrows and spends. Equally, it cannot reduce borrowing sustainably without strengthening a fair, productive and trusted domestic revenue system,” the NTA said.
The association maintained that Kenya’s debt burden is ultimately a public-interest issue, linking government borrowing and taxation to the cost of living, access to public services, business financing, employment opportunities and the economic prospects of future generations.
It called for sustained cooperation between the government, Parliament, oversight bodies, civil society, businesses and citizens to ensure that debt management and domestic resource mobilisation translate into measurable public value.
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