Nairobi — The National Treasury says it is implementing a liability management strategy aimed at reducing the government's exposure to costly short-term loans and foreign exchange volatility.

Treasury Cabinet Secretary John Mbadi said the approach seeks to refinance high-cost obligations, extend debt maturities, and increase concessional borrowing to enhance debt sustainability.

"Kenya's public debt stood at Sh11.81 trillion, equivalent to 67.8 percent of GDP, as of June 2025," Mbadi told financial journalists in Nairobi on Tuesday.

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"To mitigate prevailing debt vulnerabilities, the National Treasury has embarked on a suite of liability management operations, encompassing the refinancing of high-cost obligations, extension of debt maturities, and increased uptake of concessional financing."

The move comes in line with recommendations highlighted in the last IMF program reviews, which had consistently urged Kenya to enhance its debt management practices and address refinancing risks amid tightening global financial conditions.

Kenya's external debt now stands at Sh5.48 trillion, owed largely to multilateral lenders such as the World Bank, the African Development Bank, China, and Eurobond investors.

During the 2024/25 fiscal year, the government paid Sh1.72 trillion in debt service, including Sh579 billion to external creditors.

Under the 2025 Medium-Term Debt Management Strategy, the Treasury aims to lengthen the maturity profile of public debt, minimize exposure to interest rate and currency shocks, and ensure intergenerational equity, with 75 percent of borrowing expected from the domestic market.