Kenya to settle Sh161b debt by October as Mbadi admits government wastage

Kenya has exactly eight months to settle a Sh161 billion debt, Treasury Cabinet Secretary John Mbadi has said.  

Speaking on Spice FM on Thursday, February 27, Mbadi noted that the debt, which accrued from commercial loans (Eurobonds and syndicated loans), is due by October 2025.  

"In September, we are supposed to pay Sh25.8 billion to the Trade and Development Bank, another Sh10 billion, and also Sh83.5 billion. Add another Sh3.4 billion, and that gives you Sh123 billion by October," he told Spice FM.  

"This is besides the Eurobond…that is the kind of pressure we are in,” he added, noting that by May 2027, Kenya will be required to pay a total of Sh116 billion in Eurobond repayments, split into three equal annual payments of Sh38.7 billion.

His remarks come a month after a  report by the Auditor-General highlighted rampant misuse of public funds.  

For instance, in the 2023/2024 Financial year report, Kilifi County spent over Sh70 million on office furniture and equipment. 

Of this, Sh634,685 worth of items were delivered on June 30, 2023. An audit in October 2024 found that a 55-inch TV worth Sh151,450 was not functional, while eight office chairs and four desks had not been issued.

Additionally, two chairs and office desks were missing from the assets register.  

In Tana River County, Sh6.4 million was spent on staff allowances for a Jumuiya Trade Investment and Education Exchange Mission in the US, alongside Sh73 million on specialised medical equipment to equip Hola Level Four, however, the report revealed they were kept in boxes awaiting construction of the building and therefore not in use. 

Wajir County, on the other hand, spent over Sh9 million on generator repairs at the county headquarters.  

These are just a few examples of the rampant wastefulness within government spending.  

From the report, despite Kenya's growing debt burden, and the economic challenges in the country, the government seemed to spend taxpayer money recklessly.  

Mbadi, while acknowledging the issue of wastage, stated that the government is now taking steps to curb it while also formulating strategies to raise money for debt repayment.  

“I cannot deny that there is still wastage in government, and one of the most critical steps for us now is implementing a procurement management system. That is where we lose a lot of resources, alongside budgeting,” said the CS.  

He added: “This year, we have introduced a zero-based budget—every department must justify every shilling requested, as opposed to incremental budgeting.”

To further reduce waste, particularly in procurement, the Treasury CS said the government will introduce an online procurement platform to seal loopholes. It is expected to be fully operational by the start of the 2025/26 Financial Year.  

“We are rolling out e-procurement, which I expect to be in operation by the end of this quarter and to cover all government departments by July 1.” 

The Treasury is also transitioning from a cash-based to a technical accrual accounting system, which will track all government commitments and revenue. Additionally, the government is rolling out a Treasury Single Account to eliminate multiple state accounts.  

For the FY 2025/26, Mbadi revealed that revenue projections have been reduced by Sh183 billion, admitting that past budgets were overly ambitious.  

"We have been living a lie by over-budgeting," he said.