Kenya plans to borrow Ksh1.15 trillion during the 2026/27 financial year to finance its fiscal deficit, according to the National Treasury Annual Borrowing Plan.
The net borrowing forms part of the government’s Ksh1.996 trillion gross financing requirement for the financial year, which accounts for both the widening budget deficit and the refinancing of maturing debt obligations. The borrowing strategy, released on Monday, August 24, 2026, under the Public Finance Management Act, sets out how the state intends to raise capital while mitigating refinancing risks, containing debt service costs, and maintaining debt sustainability.
The National Treasury will source the vast majority of its net financing from domestic debt markets.
The plan allocates Ksh898 billion to net domestic financing and Ksh247.2 billion to net external financing, bringing the total net requirement to Ksh1.145 trillion.
“The total net financing requirement for the FY2026/2027 is KSh 1,145.2 billion (5.5 percent of GDP),” the National Treasury stated in its policy document.
To meet its domestic goals, the government expects to raise Ksh987.4 billion through net domestic issuance of Treasury bills and Treasury bonds. Additional inflows from domestic loan receipts will help offset repayments and accounts payable.
The Treasury affirmed that government securities will serve as the primary engine for domestic resource mobilization.
“The primary instrument for mobilizing domestic financing will be the issuance of Government securities, with a strategic emphasis on Treasury bonds,” the National Treasury explained.
To lengthen the public debt maturity profile and deepen domestic capital markets, the state will issue Treasury bonds with tenors ranging from two to 25 years, alongside infrastructure bonds.
On the external front, the government projects net external borrowing at Ksh247.2 billion after accounting for principal redemptions. Gross external disbursements are targeted at Ksh660.1 billion, comprising Ksh285.4 billion in commercial borrowing, Ksh191.6 billion in project loans, and Ksh183.1 billion in program loans.
“These inflows will be partly offset by projected external debt principal repayments of KSh 412.9 billion, yielding a net external financing of KSh 247.2 billion,” the National Treasury detailed.
The fiscal plan comes against the backdrop of expanding debt stock, with Kenya’s total public and publicly guaranteed debt reaching Ksh13.01 trillion by the end of June 2026. Data from the Treasury shows this represents a 9.22 percent increase from Ksh11.81 trillion recorded the previous year, driven largely by domestic borrowing to plug fiscal shortfalls.
Domestic debt currently accounts for Ksh7.33 trillion (56.3 percent) of the total debt portfolio, while external debt stands at Ksh5.68 trillion (43.7 percent).
For the 2026/27 financial year, the fiscal deficit is projected at Ksh1.145 trillion, or 5.5 percent of GDP. The Annual Borrowing Plan will guide borrowing operations from July 1, 2026, to June 30, 2027, subject to periodic reviews aligned with domestic and global market dynamics.
The post New Borrowing Plan Could Push Kenya’s Public Debt Past Ksh14 Trillion appeared first on Bossnana.
