The African Development Bank (AfDB) has renewed its warning over Kenya’s growing reliance on Eurobonds and commercial debt, cautioning that high yields and short maturities could intensify fiscal stress even as the government takes steps to manage its repayment schedule.
Kenya currently carries six active Eurobonds maturing between 2024 and 2048, with yields among the highest in the region.
The 2024 issuance was priced at 10.35%, well above the 7.6–10.7% African average. Although the Treasury defends the borrowing as necessary to refinance maturing obligations, economists warn the country risks entrenching a cycle of costly repayments that eat into development spending.
By mid-2025, Kenya’s public debt stood at about KSh 11.9 trillion (USD 83 billion), roughly 66% of GDP. The figure marks a slight improvement from 2024’s 65.7%, attributed mainly to the shilling’s appreciation and improved fiscal management.
Debt-service costs remain punishing, consuming more than 60% of domestic revenues. External reserves have also slid from USD 9.49 billion in 2021 to just over USD 7.4 billion in 2023, underscoring Kenya’s shrinking fiscal space and heightened exposure to exchange-rate shocks.
Despite these pressures, President William Ruto’s government has taken notable steps to ease repayment risks. In October 2025, Kenya successfully issued a new USD 1.5 billion Eurobond to buy back part of its USD 1 billion 2028 note.
The new bond, oversubscribed more than four times, was structured in two tranches: a seven-year USD 750 million note with a 7.875% coupon, maturing in 2033, and a twelve-year USD 750 million note with an 8.8% coupon, maturing in 2038.
Unlike past issuances, this one adopted an amortising structure, allowing principal repayment in instalments to smooth the fiscal burden.
The AfDB’s Africa Economic Brief credits Kenya’s proactive refinancing strategy for restoring investor confidence but warns that excessive exposure to dollar-denominated debt still poses macroeconomic risks.
The bank recommends diversifying the loan portfolio, prioritising concessional funding, and bolstering the Debt Management Office’s technical capacity to better assess and coordinate fiscal risks.
Economists say the government must now match borrowing ambition with discipline. Expanding the tax base, enhancing transparency, and curbing inefficient public investments remain central to sustaining the fragile stability achieved so far.
Without these reforms, AfDB analysts caution, Kenya could find itself perpetually rolling over debt instead of reducing it, a dangerous loop for an economy that needs every shilling for growth.
