Mbadi Dismisses Nyoro’s Debt Default Claims, Reaffirms Kenya’s Fiscal Stability
Treasury Cabinet Secretary John Mbadi has dismissed claims that Kenya is on the verge of defaulting on its debt obligations, urging political leaders to avoid making statements that could trigger unnecessary public alarm.
Appearing before Parliament on Wednesday, Mbadi admitted that Kenya is currently grappling with liquidity constraints, largely due to the timing of maturing loans. However, he firmly denied that the country is facing a debt crisis.
“I listened to one of us claim that this country is likely to default on debt repayments. That is an irresponsible statement,” Mbadi told lawmakers. “It can cause unnecessary panic and should not come from someone who has chaired the Budget and Appropriations Committee.”
His remarks come in response to Kiharu MP Ndindi Nyoro’s comments earlier in the week, in which Nyoro warned that Kenya could soon join other African nations that have defaulted on public debt. Speaking at a budget review forum organized by the Institute of Public Finance, Nyoro raised concerns over the country’s debt load, now estimated at over KSh11 trillion.
Despite acknowledging fiscal pressures, Mbadi reiterated that Kenya’s debt remains within sustainable limits. He pointed out that both the International Monetary Fund (IMF) and the World Bank have assessed and confirmed the country’s debt sustainability.
“Yes, there have been difficult moments. But as it stands, our debt is sustainable. The figures are publicly available. We have been rated internationally,” he said.
The Treasury boss attributed the current strain to a cash flow issue, noting that many of Kenya’s loans were contracted years ago and are set to mature between now and 2032.
“Our real pressure lies in liquidity. The loans were taken at different intervals, and a large number of them fall due in the next few years. But from 2034 onwards, our debt servicing obligations drop significantly,” he explained.
According to data from the Central Bank of Kenya, as of December 2024, the country owed Sh10.9 trillion, with 54% held by domestic lenders and 46% owed to external creditors.
Since President William Ruto took office, the public debt has risen from KSh8.7 trillion to more than KSh11 trillion. For the upcoming 2025/26 fiscal year, the government is projecting a budget of KSh4.2 trillion—of which approximately KSh1 trillion will go towards interest payments alone.
Nyoro argued that high levels of taxation, combined with a weakened economy, are fueling the debt problem. He warned against debt restructuring efforts, suggesting that ongoing negotiations with lenders such as China may signal deeper financial trouble.
“Increasing taxes to raise revenue is misguided. It discourages investment and consumer spending,” Nyoro said.
However, Mbadi emphasized that despite the constraints, the government has not failed in its core responsibilities, including the timely disbursement of salaries, capitation funds to schools, and transfers to county governments.
“We remain committed. There is no scenario in which Kenya will default on its loans,” he affirmed. “We are the strongest economy in the region. Let us act responsibly and maintain public confidence.”
As the country heads into another budget cycle, Mbadi called for collaboration across all branches of government to address the fiscal challenges ahead.
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Mbadi Dismisses Nyoro’s Debt Default Claims, Reaffirms Kenya’s Fiscal Stability