Nairobi — Kenya's growing debt servicing burden is increasing the country's exposure to exchange rate fluctuations, with the government spending more than Sh1.35 trillion on debt repayments in the first nine months of the 2025/26 financial year, according to the Controller of Budget.
The National Government Budget Implementation Review Report shows that Sh763.21 billion was spent on domestic debt servicing, while Sh588.85 billion went towards external debt obligations during the period ending March 2026.
The Controller of Budget warned that Kenya remains vulnerable to currency risks as 52 percent of its external debt is denominated in US dollars. Any weakening of the shilling against major currencies raises the cost of servicing foreign loans and increases the country's overall debt burden.
To manage the rising debt obligations, the government has continued implementing liability management measures, including the repurchase of international bonds, aimed at reducing refinancing risks and improving the maturity profile of public debt.
