Kenya’s gross public debt has declined for the first time in at least two decades amid strong appreciation of Kenyan shilling, according to the National Treasury.
In a report emailed to the media, the Treasury stated that total liabilities dropped by 2% to 10.93 trillion shillings ($84.6 billion) in December 2024 when compared to the previous year.
The decline in public debt was largely attributed to the appreciation of the Kenyan shilling in 2024.
The local currency appreciated by 21% last year to emerge as the world’s best-performing currency, according to Bloomberg.
A $1.5 billion bond sale and a 17% increase in diaspora remittances and export receipts helped bolster the shilling’s strength.
However, the Treasury warned that the gains could face pressure from global market uncertainties, particularly the impact of a potential trade war under US President Donald Trump’s administration, which could weigh heavily on emerging markets.
Kenya remains vulnerable with the government struggling to generate more revenue after years of accumulating debt.
The Treasury report showed that while total debt declined, domestic debt increased by 16% to 5.87 trillion shillings.
Meanwhile, external liabilities rose marginally by 0.49% to $39.1 billion.
Kenya, classified as being at high risk of debt distress, has sought support from the International Monetary Fund (IMF).
The country currently has a $3.6 billion funding program with the IMF, which is set to expire on April 1, 2025.
President William Ruto’s administration has pledged to reduce borrowing and increase domestic revenue through tax reforms and spending cuts.
However, revenue collection remains below target.
The Treasury reported that, “Revenue collected was 1.16 trillion shillings in the six months through December, 7.5% below Treasury’s target.
“All ordinary revenue categories recorded below-target performance during the period under review except investment revenue,” the report stated.
Kenya’s aggressive tax measures aimed at reducing the budget deficit sparked nationwide protests that led to 60 deaths in 2024.
The unrest showed growing public frustration over rising living costs and government policies.
Despite these challenges, the Treasury emphasised that Kenya’s efforts to reduce its public debt are showing signs of progress, supported by a stronger currency, increased exports and remittance inflows.
With the IMF program nearing expiration and global economic uncertainties looming, analysts suggest that sustaining the gains from the shilling’s performance will be critical to maintaining debt reduction momentum.
