Treasury CS John Mbadi says Kenya's debt burden is suffocating the economy
The CS pointed to the misuse of short-term loans to fund long-term projects as one of the key mistakes that plunged the country into its current economic difficulties.
Kenya is facing one of its toughest economic stretches in recent history, burdened by unsustainable debt and rising fiscal pressures, National Treasury Cabinet Secretary John Mbadi has admitted.
Mbadi said the country’s economic trajectory had been compromised by years of imprudent borrowing and poor fiscal planning but maintained that it can be recovered through strategic reforms and responsible management.
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Speaking at Migori Teachers Training College's graduation ceremony, the CS pointed to the misuse of short-term loans to fund long-term projects as one of the key mistakes that plunged the country into its current economic difficulties.
“It is true that our economy is not doing very well. It is largely because, at one time, we took short-term loans to develop long-term projects,” Mbadi said.
"The loans, some of three, five, seven and ten years, were short-term, which we have to pay with interest, but the results of the projects will start being seen after 30 years. That is the struggle.”
Despite the challenges, he expressed optimism that with the right policies and national support, Kenya can regain its financial footing. He said his debut budget for the 2025/2026 financial year will focus on long-term sustainability and fairness across all regions.
“This will be my first budget, I will be fair to the whole country,” he said, while urging Members of Parliament not to frustrate his efforts at economic recovery.
He assured Kenyans that the Kenya Kwanza government would, in the shortest time possible, manage to navigate the challenges, turn the corner, and return to the path of prosperity.
Migori Governor Ochilo Ayacko and Nyatike MP Tom Odege, who were also present, called on the CS to prioritise increased funding for the education sector, particularly the employment and remuneration of teachers.
Ayacko noted that teachers are among the most underpaid public servants and often go for years without promotion, a situation he warned could worsen under the current economic conditions.
On March 25, Mbadi had warned that Kenya’s fiscal situation was deteriorating, with the country now forced to look inward as reliance on external aid diminishes and debt servicing obligations escalate.
“We will be left to look inward, and this is the worst period for Kenya. Some time back, we decided to take loans as a country, and these loans have now reached their peak,” he said.
Kenya’s public debt currently stands at about Sh10 trillion, with nearly two-thirds of the country’s annual revenue being channelled toward servicing domestic and external loans, limiting the government’s ability to invest in development and social services.
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