William Ruto Administration Prepares To Borrow Over KSh 905b From Domestic Market 2026/2027 FY

• President William Ruto’s administration will finance 82% of the budget deficit with loans from the domestic market
• This is according to the Medium Term Debt Management Strategy published by the Public Debt Management Office
• The plan, led by Finance Minister (CS) John Mbadi, aims to refinance and manage public debt that reached 63.6% of GDP in November 2025

The National Treasury plans to rely on the domestic debt market as the main source of funding for Kenya’s budget deficit in the medium term.

The domestic financing policy aims to improve financial stability and reduce the risks associated with external debt.

For the Ministry of Finance, Kenya is turning to local loans?

Prioritizing domestic credit, according to the Treasury, provides a more sustainable balance between risk management and cost efficiency.

According to the Medium Term Debt Management Strategy (MTDS) for the fiscal year 2026/2027 to 2028/2029, the government intends to finance only 18% of its total external borrowing needs, with the remaining 82% coming from domestic sources.

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“The 2026 MTDS aims to reduce the cost and risks of debt by obtaining 18% of total borrowing from external sources and 82% from domestic sources in the medium term.

From internal sources, the strategy is to gradually reduce the stock of Treasury bills while increasing the duration of the debt and issuing medium to long-term debt securities,” the strategy published by the Office of Public Debt Management said.

On the other hand, 12% of all external loans will come from concessional sources and half from bilateral and multilateral development partners, while commercial loans will be reduced to 6%.

How much will the Ruto administration borrow?

With an estimated budget deficit of KSh 1.1 trillion for the financial year 2026/2027 from July, the share of 82% corresponds to a domestic loan of KSh 906 billion in one year.

The program, led by the Minister of Finance (CS) John Mbadiaims to refinance and manage the public debt that reached KSh 12.25 trillion (63.6% of GDP) by November 2025.

According to the Central Bank of Kenya (CBK), the value of domestic debt increased from KSh 6.74 trillion in October 2025 to KSh 6.78 trillion in November 2025.

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Domestic debt is held by financial institutions (79%), central government (7.3%), households (6.4%), non-residents (4.6%), non-financial institutions (1.8%) and non-profit institutions (0.9%).

The composition of domestic debt according to the document was Treasury bills (16%), Treasury bonds (82.33%), CBK overdraft (0.1%) and other domestic debt (1.57%).

What was Kenya’s budget for 2025/2026?

As previously reported by TUKO.co.ke, Mbadi presented a budget of KSh 4.29 trillion for the financial year 2025/2026.

The government increased regular expenditure to KSh 3.1 trillion while reducing development expenditure to KSh 693.2 billion.

One of the biggest beneficiaries was the Ministry of Defence, which was allocated KSh 202.3 billion, of which KSh 2 billion was planned for employment.

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Source: TUKO.co.ke