The National Treasury has unveiled a plan to reduce Kenya’s reliance on external creditors, who currently provide nearly half of the country’s budget support loans, as part of efforts to rein in soaring debt.

According to the National Treasury Cabinet Secretary John Mbadi, his ministry is considering securing 25 percent of borrowing from external lenders while sourcing the balance or 75 percent from internal sources over the medium term.

"Tapping domestic debt is necessary in order to mitigate against exchange rate risks on Kenya's external debt," explained Mr. Mbadi while unveiling Kenya's Medium Term Debt Management Strategy on Wednesday.

He added, "With the shrinking external financing, as a country we must expand our domestic finance base, shift focus to responsive domestic borrowing, ruthlessly fight graft and improve transparency in debt management."

In the new plan, the Treasury will also be rolling out plans to lessen costs while managing the risks pf public debt, added Mr. Mbadi.

Statistics show that Kenya's public debt was KES10.5 trillion as at the end of June 2024, with domestic creditors accounting for over half or 51.1 percent while external sources accounted for 48.9 percent.

During the forum, National Treasury Permanent Secretary Dr. Chris Kiptoo noted that policymakers are considering ways to extent the maturing of public debt instruments while also expanding the domestic market by among others issuing long-tenured debt securities amid reforms on debt management.

At the moment, Kenya's debt from multilateral lenders accounts for 53.9 percent of foreign loans, which has been part of the country's push to maximize the use of concessional financing while slashing down the loans sources from commercial lenders.

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