Debt, Hunger, and a Country on the Edge: Kenya’s Budget Is Failing Its People

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The National Debt Crisis

Kenya’s public debt stands at around 65–68% of GDP, totaling approximately KSh 11 trillion ($85 billion) as of March 2025—up from 67.6% in September 2024 . Annual interest payments alone consume nearly a third (about 33–64%) of government revenue, far exceeding the IMF’s recommended maximum of 30% . With such a heavy debt burden, there’s little fiscal space for essential investments.

Austerity by Any Other Name?

In response to mounting pressure, Parliament approved a 4.29 trillion‑shilling (~$33bn) budget for FY 2025/26 and pledged to cap the deficit at 4.5% of GDP—down from prior years’ 5.1%. Yet instead of boosting growth, the budget focuses largely on cost-cutting and compliance, with limited vision on revenue diversification and public welfare.

Public Services on the Backburner

Expenditure for healthcare, education, and social welfare remains stagnant or shrinking in real terms. The scorching debt service is outpacing allocations to development and essential services. Even sectors like agricultural subsidies—vital for smallholder farmers—are receiving only token boosts compared to the debt interest bill .

With little cash for healthcare, education, water, and food programmes, vulnerable populations are slipping deeper into poverty and hunger.

Rising Hunger and Inflation

The IMF’s conditional austerity policies in 2024 led to painful price increases in staples such as bread, cooking oil, and fuel—sparking nationwide protests where over 50–60 people were killed. Though the government withdrew the Finance Bill in June 2024, inflation remains elevated, making basic food items unaffordable for many households.

Even now, budget constraints mean food subsidies and nutrition programmes aren’t priorities, worsening hunger in rural and informal urban settlements.

Infrastructure at What Cost?

Infrastructure, especially the Standard Gauge Railway (SGR), has become a banner of national pride—and national debt. In 2024, passenger fares rose due to ballooning loan repayments apnews.com. The pressure shifted the financial burden—from the state—to consumers and taxpayers.

Domestic borrowing—with government targets to favor fixed-rate long bonds—further strains local markets and raises interest rates.

Slowing Growth and Private Sector Strain

Kenya’s economy slowed to about 4.6% in 2024, down from 5.6% the previous year. The World Bank and IMF predict modest recovery to around 4.5–5.3% in 2025, but warn this is tenuous due to high debt, elevated interest rates, and collapsing private credit kpmg.com.

A weak business environment, higher borrowing costs, and tighter fiscal policy risk pushing the economy into a low-growth trap.

Debt Servicing vs. Development: A Broken Trade-Off

Here’s the stark trade-off:

  • ⏫ Debt Service – Consumes ~30–60% of revenue.

  • ⏬ Social Spending – Starved of funds.

  • 💸 Borrowing – Replaces social investment.

  • 📉 Growth – Stagnates under high interest and low capital investment.

According to a World Bank debt review, Kenya could drop its debt-to-GDP to around 44% by 2035—but only with strong governance reforms and prudent spending choices thesharpdaily.comworldbank.org.

IMF Pressure and Conditionalities

Kenya's pivot toward IMF support reflects a liquidity crunch; a previous IMF Extended Credit Facility review was reportedly abandoned in March 2025. The IMF insists on austerity measures—deficit caps, spending discipline, tighter revenue collection—raising alarms about structural adjustment-style pain .

Critics argue that this approach safeguards creditors—not citizens—by prioritizing debt repayment over public investment. The Guardian even referred to it as neo-colonial economic meddling.

Alternatives to Austerity

If Kenya wants to change course, here are smarter options some experts propose:

  1. Fiscal reprioritization: Cut non-essential spending (e.g., expensive perks, unchecked procurement, bloated parastatals).

  2. Governance reforms: Curb corruption, strengthen public procurement, make county spending transparent.

  3. Boost revenue smartly: Invest in digitalized tax collection, reduce leakage, tax property and luxuries.

  4. Public investment: Target infrastructure and agri-development that spur growth and job creation.

  5. Debt restructuring: Negotiate longer-term, concessional loans and refinancing—avoid high-cost commercial debt.

🔚 Into the Future

Kenya is at a crossroads: sink under debt, cuts, and exclusion—or reclaim its sovereignty through equitable, growth-oriented policies.

The government must balance paying creditors with investing in citizens. Anything less risks repeating the trauma of 2024—both economically and politically.


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