NAIROBI, Kenya, Oct 29 – The National Treasury has been questioned over the Sh533.7 billion the government paid in interest on domestic debt in the 2023/2024 financial year, as Parliament raised concerns over the cost of public borrowing.
The Public Accounts Committee (PAC) raised the issue on Thursday while examining the Auditor-General’s reports for the year, which showed total public debt interest payments of Sh762.44 billion.
The committee, chaired by Butere MP Tindi Mwale, questioned Treasury Principal Secretary Chris Kiptoo on the high cost of servicing domestic debt and called for a national discussion on public borrowing.
Kiptoo attributed the increased reliance on domestic borrowing to limited access to external financing during the period. He said interest rates on local borrowing were high because they were determined by market conditions.
The Treasury PS also said the shilling had been under pressure before the government made a partial repayment of its Eurobond in 2024.
Domestic debt currently accounts for 57 percent of Kenya’s public debt, while external debt makes up the remaining 43 percent, Kiptoo told the committee. He said domestic interest rates had since declined, reducing borrowing costs.
Kiptoo also told MPs that half of every shilling collected by the Kenya Revenue Authority goes towards paying interest on public debt.
The committee also questioned the Treasury over pending bills, which members said stood at Sh175 billion.
Kiptoo said the outstanding historical bills had previously reached Sh255 billion, but the government had paid Sh80 billion.
He added that Cabinet had approved payment of the remaining bills, with the process expected to start within two weeks.
On delays in releasing funds from the Exchequer, Kiptoo said the Treasury was up to date with disbursements and that county governments, state departments and state agencies were not owed any money by the Exchequer.
