The National Treasury has unveiled an ambitious borrowing strategy for the 2026/27 financial year, targeting a staggering Ksh1.15 trillion to plug the country’s fiscal deficit. According to the Treasury’s newly released Annual Borrowing Plan, the borrowing forms a core part of the government’s colossal Ksh1.996 trillion gross financing requirement for the fiscal period. The plan, prepared under the Public Finance Management Act and published on the Treasury portal, outlines how the State intends to raise these vital funds while balancing borrowing costs, mitigating refinancing risks, and stabilizing the country’s public debt structure.
The Treasury plans to source the lion’s share of its net financing requirements from the local market. The blueprint provides for Ksh898 billion in net domestic financing, contrasted with Ksh247.2 billion in net external financing, bringing the total net financing requirement to precisely Ksh1.145 trillion—representing 5.5 percent of the Gross Domestic Product (GDP).
To achieve the domestic target, the government expects to raise Ksh987.4 billion through net domestic borrowing via Treasury bills and Treasury bonds, which will be offset by domestic loan repayments and accounts payable.
“The primary instrument for mobilizing domestic financing will be the issuance of Government securities, with a strategic emphasis on Treasury bonds,” the National Treasury stated in the policy document.
The state plans to roll out Treasury bonds carrying maturities ranging from two to 25 years, alongside specialized infrastructure bonds aimed at funding critical national development projects.
On the international front, gross external borrowing is projected at Ksh660.1 billion. This comprises Ksh285.4 billion in commercial borrowing, Ksh191.6 billion in project loans, and Ksh183.1 billion in programme loans.
However, these foreign inflows will be substantially offset by projected external debt principal repayments amounting to Ksh412.9 billion, yielding the net external financing figure of Ksh247.2 billion. Financial analysts note that this borrowing mix demonstrates the government’s deliberate preference for greater reliance on domestic debt, a move designed to limit exposure to volatile foreign exchange fluctuations and external macroeconomic risks.
The release of the 2026/27 borrowing roadmap coincides with a fresh milestone in Kenya’s financial liabilities. Official figures reveal that the country’s public and publicly guaranteed debt climbed to Ksh13.01 trillion by the end of June 2026.
This marks a 9.22 percent surge from the Ksh11.81 trillion recorded a year earlier. A breakdown of the debt portfolio shows that domestic debt accounts for the majority at Ksh7.33 trillion, or 56.3 percent of the total, while external debt stands at Ksh5.68 trillion, representing 43.7 percent. The Treasury attributed this upward trajectory primarily to aggressive domestic borrowing used to bridge previous fiscal shortfalls.
The Annual Borrowing Plan remains active from July 1, 2026, through June 30, 2027, though fiscal authorities have noted that it will face periodic reviews to adapt to shifting economic landscapes and domestic financial market dynamics.
