Treasury given 60-day ultimatum to deliver debt management framework

Members of Parliament have approved a major cut in the government’s mandatory spending and directed the National Treasury to craft a detailed plan to manage the country’s growing public debt.

The legislators endorsed a report that lowers the Consolidated Fund Services (CFS) budget by Sh295.28 billion and gave the Treasury 60 days to publish a national debt management policy.

The CFS contains unavoidable expenses charged directly to the Consolidated Fund, including debt repayments, pensions, salaries for constitutional commissions, and payments on guaranteed loans. These items do not fall under the annual Appropriations Bill.

According to the National Assembly’s Debt and Privatisation Committee, the revised budget for CFS in the 2024/25 financial year drops from Sh2.29 trillion to Sh1.99 trillion.

The committee attributed this decline to lower public debt servicing costs, with no change in other expenses such as pensions, guaranteed debt, and wages.

“The Sh1.99 trillion CFS expenditures will comprise public debt servicing expenditures (Sh1.75 trillion), pension payments (Sh223.15 billion), salary and allowances (Sh4.08 billion), and guaranteed debt payments and other miscellaneous expenditure (Sh19.7 billion),” the committee noted in its report.

The committee insisted that the Treasury must act swiftly to develop a clear and measurable policy that outlines how Kenya will reduce its debt load and open up fiscal room for other priorities.

“The policy should articulate clear guidelines and measurable targets aimed at reducing the debt service burden and enhancing fiscal space,” said Njoki Mrembo, vice-chairperson of the committee.

The MPs warned that the continued rise in public debt, which reached Sh11.35 trillion in March 2025, is creating unnecessary financial pressure.

They argued that without a solid management plan, the country cannot effectively use available options such as debt prepayments, restructuring, or swaps.

The committee said a proper liability management framework will help the Treasury reduce refinancing risks, improve planning, and ensure that public debt decisions support long-term development goals.

The call comes amid growing concerns that mandatory spending on debt is crowding out funds meant for key services and investments.

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