The Kenyan government will primarily rely on domestic borrowing to finance its 2026/27 budget, Treasury Cabinet Secretary John Mbadi has announced. Speaking during the presentation of the KSh4.84 trillion budget, Mbadi said the government plans to borrow approximately KSh684 billion from the local market while reducing dependence on external loans.
According to the Treasury, the move is part of a broader strategy to manage public debt sustainably and shield the country from foreign exchange risks associated with external borrowing. Mbadi noted that domestic financing offers greater predictability and flexibility, especially amid global economic uncertainties.
The CS emphasized that the government remains committed to fiscal discipline and reducing the budget deficit over time. He added that the administration is pursuing reforms aimed at improving revenue collection, curbing wastage, and ensuring value for money in public spending.
However, economists have cautioned that heavy reliance on domestic borrowing could increase competition for credit between the government and private businesses, potentially driving up interest rates. Despite these concerns, the Treasury maintains that the borrowing plan is necessary to finance key development projects and maintain essential public services while keeping debt levels manageable.
According to the Treasury, the move is part of a broader strategy to manage public debt sustainably and shield the country from foreign exchange risks associated with external borrowing. Mbadi noted that domestic financing offers greater predictability and flexibility, especially amid global economic uncertainties.
The CS emphasized that the government remains committed to fiscal discipline and reducing the budget deficit over time. He added that the administration is pursuing reforms aimed at improving revenue collection, curbing wastage, and ensuring value for money in public spending.
However, economists have cautioned that heavy reliance on domestic borrowing could increase competition for credit between the government and private businesses, potentially driving up interest rates. Despite these concerns, the Treasury maintains that the borrowing plan is necessary to finance key development projects and maintain essential public services while keeping debt levels manageable.
