Kenya's Debt Nightmare Deepens

Kenya's mounting debt crisis has reached a critical milestone, with the total public debt hitting an unprecedented Sh10.8 trillion. The situation has become so severe that the country now ranks fourth globally in debt service burden, trailing only behind Sri Lanka, Ghana, and Egypt.

The gravity of the situation becomes clear when looking at the numbers: Kenya is currently spending nearly half (49.9%) of its revenue on debt repayment. In 2023 alone, the country's debt service costs surged by 35%, with external debt payments amounting to Sh613.3 billion - split between Sh329.5 billion in principal payments and Sh283.8 billion in interest payments.

The debt burden has grown at an alarming rate, with public debt swelling by Sh649 billion in just four months, jumping from Sh10.1 trillion to the current Sh10.8 trillion. The composition of this debt is nearly evenly split between domestic and external sources, with domestic debt slightly higher at Sh5.66 trillion (52.3%) compared to external debt at Sh5.14 trillion (47.7%).

China remains the largest recipient of Kenya's external debt payments, highlighting the country's significant exposure to Chinese loans. This comes at a time when the government is grappling with fiscal consolidation challenges, and rising global interest rates are further straining debt servicing costs.

The implications for ordinary Kenyans are substantial, as the massive debt servicing requirements mean that half of every tax shilling collected goes toward paying creditors rather than funding essential public services and development projects. This situation poses significant challenges for the government's ability to maintain public services while managing its mounting debt obligations.