Key Insights from the 2023/24 Public Debt Management Report
According to the report, Kenya’s debt-to-GDP ratio has dropped from 72% last year to 65.7%
The National Treasury’s release of the 2023/24 Annual Public Debt Management Report has highlighted Kenya’s commitment to responsible debt management, transparency, and economic growth.
With Kenya’s public debt reaching KShs. 10.58 trillion, the government is implementing new strategies to bring debt within sustainable levels while aiming to stimulate economic growth.
Hosted at the Serena Hotel, the report’s dissemination event drew a diverse group of stakeholders eager to address public debt’s challenges and implications.
James Muraguri, CEO of the Institute of Public Finance (IPF), emphasized the importance of open discussion and fiscal reform, underscoring the IPF’s role in advocating responsible spending through its Annual Shadow Budget.
“Today’s conversation is timely,” said Muraguri, “as the government reaffirms its commitment to fiscal consolidation and a Zero-Based Budget, key elements in alleviating debt and reducing servicing pressures.”
Public Debt Management Report
According to the report, Kenya’s debt-to-GDP ratio has dropped from 72% last year to 65.7%, thanks to a strategic rebalancing of debt towards domestic borrowing.
This shift reduces exposure to foreign currency volatility while allowing for a steadier path to achieving the debt-to-GDP target of 55% by 2027, a milestone anticipated a year ahead of schedule.
Raphael O. Otieno, Director General of the Public Debt Management Office, highlighted the challenges of implementing the debt strategy.
“Our access to international markets has been limited, impacting planned external borrowing,” Otieno explained, emphasizing the need for a diversified debt portfolio to mitigate similar future constraints.
Debt servicing costs have surged by 30% due to the shilling’s depreciation and repayment of a USD 0.5 billion Eurobond.
To ease future financial burdens, the Treasury is setting up sinking fund regulations—an effort to create savings earmarked for debt repayment and to stabilize fiscal planning.
Principal Secretary Dr. Chris Kiptoo addressed the need for a more inclusive tax policy, which will allow the government to lower rates over time while expanding the tax base.
“By broadening the tax base, we aim to reduce VAT from 16% to 14% and income tax from 30% to 25%,” Dr. Kiptoo said.
This policy shift, he explained, seeks to distribute tax responsibilities more equitably, with more Kenyans participating in funding the nation’s development goals.
During the forum, Auditor General Nancy Gathungu called for more comprehensive debt reporting, particularly on non-guaranteed debt and contingent liabilities in public-private partnerships.
“We are making decisions that solve immediate problems but risk creating future issues,” she noted, pointing out gaps in debt reporting and urging better fiscal planning to avoid unexpected burdens on public resources.
Despite setbacks, Kenya’s fiscal policies are making strides. Over the past three years, the fiscal deficit has consistently decreased, reflecting the government’s dedication to prudent spending. In FY2021/22, the deficit stood at 5.9%, falling to 5.4% in FY2022/23, and is projected to drop to 4.3% this year.
Looking forward, the Treasury projects that debt servicing as a percentage of revenue will decrease from 68% to 59.8% by 2027, which will free up resources for development.
This goal, alongside a continued focus on alternative borrowing, flexible bonds, and restructuring, signals Kenya’s strong commitment to a more resilient and self-reliant economy.
With an emphasis on transparency, Kenya is actively addressing the complexities of debt management while preparing for sustainable growth.
The measures outlined in the 2023/24 report underscore a vision of a Kenya where debt is managed responsibly, allowing the nation’s economic health and development to flourish.
This report, paired with concerted fiscal reform and citizen participation, marks a significant step forward in building a stable future for Kenya.
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