Kenya's Debt Woes Unpacked

In the recently published draft for the 2025 Medium Term Debt Management Strategy (MTDMS), the Treasury highlighted structural weaknesses, fiscal constraints, and external economic factors that are complicating efforts to stabilise public debt.
The Treasury noted that the credit downgrade which was recently reversed by Moody had a significant impact on Kenya’s ability to secure favourable loan terms.

Consequently, the downgrade led to increased borrowing costs, reduced access to credit markets, lower investor confidence, currency depreciation, and an elevated risk to debt sustainability.

Additionally, the duplication of legal provisions in the Central Bank of Kenya (CBK) Act and the Public Finance Management (PFM) Act of 2012 has created conflicts, giving CBK unchecked fiscal agency privileges without adequate accountability.