By Peace Muthoka
NAIROBI, Kenya — National Taxpayers Association (NTA) Chief Executive Officer Patrick Nyangweso has warned that Kenya’s rising public debt and the growing cost of debt service could undermine efforts to raise domestic revenue unless the government strengthens expenditure controls, improves accountability and ensures borrowed funds deliver measurable public value.
Speaking during a coalition meeting on Kenya’s national debt burden and domestic resource mobilisation, Nyangweso said the country had reached a critical point in the management of its public finances, requiring closer cooperation between government institutions, oversight bodies, civil society, the private sector, academia and citizens.
He said Kenya’s fiscal challenges could not be addressed by one institution or sector working alone, but required “honest dialogue, credible evidence, institutional cooperation and sustained citizen engagement.”
According to the NTA, Kenya’s public and publicly guaranteed debt provisionally stood at Sh13.013 trillion at the end of the 2025/26 financial year, comprising approximately Sh7.329 trillion in domestic debt and Sh5.685 trillion in external debt. The debt-to-GDP ratio was reported at about 68.5 per cent.
Nyangweso said the debt stock had increased by nearly Sh1.2 trillion in a single financial year, rising from about Sh11.814 trillion to Sh13.013 trillion. Domestic debt accounted for approximately Sh1.003 trillion of the increase, representing about 84 per cent of the annual rise in total debt.
Debt servicing takes a heavy toll
The NTA CEO said the rising debt burden was particularly concerning because of the amount of government revenue being committed to servicing existing obligations.
In the 2024/25 financial year, Kenya spent approximately Sh1.722 trillion on public debt service, equivalent to 71.2 per cent of the Sh2.42 trillion collected in ordinary revenue.
Interest payments alone amounted to about Sh987.5 billion, representing roughly 40.8 per cent of ordinary revenue.
Nyangweso said the figures demonstrated why increased revenue collection does not necessarily translate into improved public services.
“The problem is not simply that Kenya collects too little,” he said. “It is that a very large share of what Kenya collects is already committed before it can finance current public priorities.”
As a result, sectors such as health, education and infrastructure can continue experiencing financial constraints even when government revenue collections rise.
NTA calls for fairer revenue mobilisation
While acknowledging the need to strengthen domestic revenue collection, Nyangweso cautioned against treating taxation as the sole solution to Kenya’s fiscal challenges.
The NTA noted that the Medium-Term Revenue Strategy seeks to improve tax administration, broaden the tax base, strengthen compliance and respond to the growth of the informal and digital economies. The strategy targets an increase in the revenue-to-GDP ratio to about 20 per cent by the end of the 2026/27 financial year, up from 14.3 per cent in 2022/23.
However, Nyangweso said additional revenue would have limited impact if it was quickly absorbed by debt repayments, inefficient expenditure and fiscal leakages.
“Domestic resource mobilization cannot succeed through tax measures alone,” he said.
He called for a broader fiscal compact that combines a fair and predictable tax system with stronger action against tax evasion and illicit financial flows, protection of low-income households, efficient public spending and transparent debt management.
According to Nyangweso, taxpayers are more likely to support revenue measures when they can see a clear connection between what they contribute and the services they receive.
He said citizens expect their taxes to translate into better healthcare, quality education, reliable infrastructure, social protection, economic opportunities and responsive public institutions.
Warning over a revenue-debt treadmill
Nyangweso further warned that Kenya risks falling into what he described as a “revenue-debt treadmill”, where additional revenue is increasingly consumed by existing financial obligations instead of being directed towards development and essential services.
He explained that continued borrowing to finance government expenditure creates new interest obligations, which in turn place further pressure on future revenue.
Heavy domestic borrowing could also make credit more expensive or less available to businesses, potentially weakening private investment and employment while slowing the growth of the tax base.
For this reason, Nyangweso said, restoring public trust must be at the centre of Kenya’s fiscal reforms.
“People are more willing to contribute where taxation is fair, expenditure is transparent and public institutions can demonstrate that revenue produces tangible results,” he said.
Debt burden threatens service delivery
The NTA CEO also linked the country’s debt pressures to challenges experienced in the delivery of public services.
He pointed to delayed county transfers, reduced development spending, pending bills, inadequate school capitation, constrained health financing and stalled infrastructure projects as some of the consequences of fiscal pressure.
“These are not merely accounting consequences,” Nyangweso said, noting that fiscal constraints affect patients seeking treatment, children attending school, businesses waiting for government payments, farmers relying on infrastructure and young people searching for employment.
He also raised concerns about the burden being passed to future generations, arguing that borrowing should be tied to productive investments whose benefits extend beyond the present.
“Young Kenyans should not inherit large repayment obligations without receiving corresponding assets, services and economic opportunities,” he said.
Call for greater transparency
Nyangweso said the coalition meeting was aimed at moving beyond general concern about Kenya’s debt situation and developing practical, evidence-based solutions.
The meeting sought to deepen stakeholder understanding of the link between public debt, domestic resource mobilisation and public service delivery, while encouraging dialogue on how Kenya can balance revenue mobilisation with debt sustainability, economic growth and expenditure accountability.
He called for greater transparency in debt management, saying citizens should be able to trace public borrowing from the loan agreement through budget allocation, procurement and payment to the actual project and public benefit delivered.
He further urged the government to strengthen action against waste, corruption, procurement irregularities and inefficient spending.
“Every additional shilling of debt should be justified by the economic, social or institutional benefits it produces,” Nyangweso said.
Ultimately, he said Kenya needs to address both sides of the fiscal equation — how it raises revenue and how it borrows, allocates and spends public resources.
“Kenya cannot tax its way out of debt without reforming how it borrows and spends,” Nyangweso said, adding that the country also cannot sustainably reduce borrowing without building a fair, productive and trusted domestic revenue system.
He urged stakeholders to use the coalition meeting to challenge assumptions, interrogate available evidence and develop practical recommendations capable of influencing policy, strengthening accountability and rebuilding the connection between taxation and public value.
