Kenyans bear burden as debt payment is squeezes funds for essential services

Kenya is spending an increasingly large share of its public resources servicing debt at a time when households are struggling with the cost of living and essential public services are facing funding pressures.

Debt repayments are projected to consume nearly four out of every five shillings collected in government revenue in the current financial year, tightening the squeeze on resources available for hospitals, schools, social protection and development projects.

A new report by Amnesty International links the country’s debt burden and taxation policies to growing economic hardship, arguing that the government’s fiscal choices have undermined access to essential services and contributed to the discontent that fuelled youth-led protests.

The report, Human Rights Under Siege: Authoritarian Practices and Economic Pressure Amid Youth-Led Protests in Kenya, says debt servicing accounted for 68.7 per cent of the national budget in the 2025/26 financial year, compared with 6.7 per cent allocated to health, 18.7 per cent to education and 3.6 per cent to social protection and poverty reduction.

The figures, drawn from National Treasury data reviewed by Amnesty, illustrate the pressure debt obligations are placing on the country’s spending priorities.

The report argues that debt servicing has become the largest budget item, overtaking education spending in the 2014/15 financial year.

The latest Treasury projections show continuing pressure on government finances, with total debt service expected to rise to Sh2.301 trillion in the 2026/27 financial year, equivalent to 79.8 per cent of ordinary revenue. This compares with Sh1.875 trillion, or 72.4 per cent, in the previous financial year.

This means that for every Sh100 the government expects to collect in ordinary revenue, nearly Sh80 will be required to meet debt repayment obligations, leaving the remainder to support other government operations and spending needs.

"The result is that businesses cannot expand, formal job creation stalls, and the long-term tax base shrinks, reducing the potential for future revenue generation.More generally, debt obligations place a significant constraint on Kenya’s fiscal space because public debt service has a priority claim on government revenues," the report says.

"The Public Finance Management Regulations require that public debt charges are payable from the Consolidated Fund before any other expenditure commitments are made. This in turn drives the government to reduce social spending and increase taxes, which led to the protests in 2023 and 2024," Amnesty argued.

Amnesty says the debt figures highlight the difficulty the government faces in meeting its obligations to fund public services while responding to citizens’ demands for better living conditions. The organisation also found that Kenya’s public debt has grown to a level that places substantial demands on the national budget.

According to the National Treasury’s 2026 Medium-Term Debt Management Strategy, public and publicly guaranteed debt stood at Sh11.814 trillion at the end of June 2025, equivalent to 67.8 per cent of gross domestic product (GDP).

The debt comprised Sh6.326 trillion in domestic borrowing and Sh5.488 trillion in external debt. Domestic debt accounted for 53.6 per cent of the total, while external borrowing made up 46.4 per cent.

The Treasury’s Public Debt Management Office dashboard subsequently put the debt stock at approximately Sh12.32 trillion as of March 2026, comprising about Sh6.78 trillion in domestic debt and Sh5.54 trillion in external debt.

During the first three months of the 2026/27 financial year, the government spent approximately Sh490.5 billion on public debt obligations against Sh631.8 billion collected in tax revenue, according to figures reported from the National Treasury. This represented about 77.6 per cent of tax receipts collected during the period.

Amnesty noted that the narrow margin between government revenue and debt obligations affects the financing of recurrent expenditure, development programmes and transfers to counties, potentially forcing the government to borrow more or increase taxes.

The report argues that debt obligations have a ripple effect on the availability and delivery of public services.

Amnesty also says the government has repeatedly revised its debt ceiling upwards whenever the limit approached, rather than adhering to the original threshold.

In 2015, the debt ceiling stood at Sh6 trillion before it was revised to Sh9 trillion in 2019 and Sh10 trillion in 2022. The ceiling was later replaced with a GDP-based anchor of 55 per cent.

"While a GDP measure allows debt capacity to adjust with the size of the economy, it can be less visible politically, reducing transparency and making it harder for citizens to hold the government to account with an absolute limit.

"As Kenya’s public debt has continued to rise it currently sits at Sh12.3 trillion debt servicing has taken up a larger share of revenue, significantly limiting the fiscal resources available for social spending."

The report says the need to balance debt repayments with social spending has contributed to delays in capitation payments to schools, while funding for subsidised secondary education and school feeding programmes has been reduced or delayed.

In 2024, the government faced public criticism after acknowledging that fiscal constraints had prevented it from fully financing the Free Day Secondary Education programme. School heads reported shortfalls in capitation funding, raising concerns about the sustainability of subsidised secondary education and the financial burden on households.

"School heads reported substantial shortfalls in capitation funding, while parliamentary discussions highlighted concerns that inadequate allocations were undermining the sustainability of subsidized secondary education and shifting financial burdens onto households," the organisation says.

"Funds meant for subsidized secondary education and school feeding programmes are routinely slashed or delayed, shifting the financial burden directly onto struggling households," the report says.

"When schools receive less funding than required, the burden can shift to parents through requests for additional contributions, potentially worsening the challenges faced by low-income households," the report adds.

Amnesty also cites delays in the disbursement of county allocations. According to figures from the Controller of Budget, Sh30 billion meant for counties in the 2023/24 financial year was not transferred until the following financial year.

"This inevitably causes county operations to be frozen, undermines health and other devolved functions, and cripples sub-national development. These delays have not only led to persistent strikes by county health workers and other social service providers but have also forced people to resort to private health services, which are often expensive and inaccessible to most people," Amnesty said.

The report also links debt obligations to tax measures and rising fuel costs that contributed to public discontent during the protests of 2023 to 2025.

"Workers in almost all of Kenya’s counties have protested over unpaid and/or delayed salaries in the past three years. Between 2020 and 2025 government employees organized a total 180 protests related," Amnesty reports.

Of the 79 protesters interviewed on economic issues, 56 cited higher fuel costs and new tax measures as reasons for participating in protests, according to Amnesty.

Amnesty also examined the effects of economic pressure on employment and household incomes, noting that Kenya’s public sector employs approximately 1.02 million people, including more than 400,000 teachers.

The organisation argues that wage-bill reforms and reductions in public spending directly affect formal employment, household earnings and the delivery of public services.

Some workers interviewed by Amnesty in Nairobi, Kiambu and Kajiado said they had experienced reduced employment opportunities. Matatu operators interviewed by the organisation also reported lower incomes, citing higher fuel and operating costs alongside a decline in customers.