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Kenya’s domestic debt has surged by KSh 777 billion in less than a year, reaching KSh 6.187 trillion as of May 16, 2025. This increase reflects the government’s growing reliance on internal borrowing to bridge budget deficits and fund operations.
📊 Breakdown of Domestic Debt Instruments
- Treasury Bonds: Totaling KSh 5.03 trillion, they account for over 84% of domestic debt.
- Treasury Bills: Increased to KSh 949.09 billion, representing approximately 15.87% of total securities.
- Central Bank Overdraft: Nearly doubled from KSh 61.02 billion to KSh 93.21 billion within the same period.
- Other Domestic Debt: Including advances from commercial banks and pre-1997 government overdrafts, rose modestly from KSh 106.25 billion to KSh 110.38 billion. www.multilinks.biz
🏦 Debt Holders
- Banking Institutions: Remain the largest holders, accounting for 45.07% of domestic debt as of May 2025, a slight decrease from 46.17% in June 2023.
- Pension Funds: Reduced their stake from 33.42% to 28.76% over the same period.
- Other Investors: Including custodial and nominee accounts, increased their share significantly from 7.13% to 13.03%.
📈 Fiscal Implications
The rise in domestic debt has implications for Kenya’s fiscal health. In the fiscal year 2023/2024, Kenya’s net domestic financing was KSh 595.57 billion, or 89% of the target . The government aims to reduce its budget deficit to 3.8% of GDP for the 2025/26 fiscal year, down from the current 4.3%. www.multilinks.biz
Additionally, Kenya’s public debt interest payments are on pace to cross KSh 1 trillion in 2025, with KSh 840.73 billion spent on servicing public debt between July 2023 and June 2024.
These developments underscore the importance of prudent fiscal management and the need for strategies to ensure debt sustainability.
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