I hear many lamenting about our external debt, and not enough lamenting internal debt. Yes the money stays in the country, but it still takes a significant amount away from what we could be using as budget cover.

Then again if we didnt borrow, we may not even be able to fund some essential services. The debt, by extension, helps us fund key services, BUT the debt by definition means the interest we are paying takes away funds we could have been using for budget cover.

In 2021/22 we will be paying Kshs 905 billion (39% total budget) to our debtors. Most of our debt is domestic (Ksh 507 billion – 63% of total debt), the rest we owe externally. Our internal debt is most comprised of Treasury Bills/Bonds amounting to Ksh 275.5 billion (28% of total debt). Our biggest external debtors are the Sovereign Bond (Ksh 48 billion – 5% of total debt), followed by China (Ksh 33 billion – 4% of total debt).

In 5 years, our total debt will grow by 74%, driven by internal debt redemption (95% and external debt redemption (91%).