Ndindi Nyoro Warns of Possible Debt Default as Kenya’s Public Debt Hits KSh11 Trillion

Kiharu MP Ndindi Nyoro has issued a stern warning over Kenya’s rising public debt, cautioning that the country is teetering on the edge of a potential default. Speaking at the Institute of Public Finance’s annual budget review forum, Nyoro said Kenya’s debt trajectory poses serious economic risks.

According to the legislator, Kenya’s public debt currently stands at approximately KSh11 trillion, having surged from just under KSh2 trillion over the past twelve years. He noted that this alarming growth, coupled with strained fiscal conditions, could see Kenya follow other African nations that have defaulted on sovereign debt.

“Any indication that we are going to default or are unable to service our loans is more catastrophic to our economy,” said Nyoro, emphasizing that public statements and policy actions must reflect the seriousness of the country’s financial obligations.

Data from the Central Bank of Kenya (CBK) shows that as of December 2024, the country’s debt stood at KSh10.9 trillion, with 54% owed to domestic lenders and 46% to external creditors.

Since President William Ruto assumed office, public debt has grown by more than KSh2 trillion—from KSh8.7 trillion to over KSh11 trillion. Nyoro, who until February 2025 chaired the Budget and Appropriations Committee, has become increasingly vocal about the implications of Kenya’s borrowing strategy.

The 2025/2026 national budget is projected to hit KSh4.2 trillion, with about KSh1 trillion allocated for interest payments. Nyoro estimates that KSh750 billion will go toward servicing domestic debt and KSh200 billion toward external repayments.

Of growing concern is Kenya’s planned engagement with China, which Nyoro sees as a possible sign that the government is seeking to restructure its loans. President Ruto is expected to visit China soon, and debt discussions are rumored to be part of the agenda.

“If we go into debt renegotiation, that may signal to the international financial system that we are struggling. That perception alone can trigger higher borrowing costs and reduce investor confidence,” he said.

Nyoro also criticized recent tax increases introduced since 2022, arguing they have weakened consumer spending and stalled economic growth.

“Increasing taxes to get more revenue is a fallacy. It distorts economic decisions. If I had planned to buy a car, I would now hold off because the government is coming for my income. That hesitation affects overall revenue collection,” he explained.

The Kiharu MP’s remarks come at a time when Kenya’s economy is under pressure from both domestic and international factors, including global inflation, a weakening shilling, and rising cost of living.

Nyoro urged the government to reassess its fiscal policy, prioritize expenditure, and focus on sustainable ways to reduce the debt burden without compromising economic growth.

As debate over Kenya’s debt sustainability continues, all eyes remain on the Treasury and the Executive as they finalize the 2025/2026 budget estimates and prepare for upcoming international engagements.

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Ndindi Nyoro Warns of Possible Debt Default as Kenya’s Public Debt Hits KSh11 Trillion