As the country grapples with mounting fiscal pressure and an expanding budget, President William Ruto’s administration has turned to a wide array of foreign governments for financial support, securing over Ksh57.4 billion in bilateral loans and grants for the 2025/26 financial year.
According to the latest draft budget estimates released by the National Treasury, the funding from 13 countries is expected to help finance Kenya’s proposed Ksh4.2 trillion national budget.
The money will support key sectors including energy, transport, health, water, education, and digital infrastructure—core pillars of Ruto’s ambitious economic transformation agenda.
The external financing, outlined in the 2025 Budget Policy Statement (BPS), is part of a strategic shift aimed at reducing the country’s reliance on costly domestic borrowing.
Instead, the Treasury is deepening bilateral partnerships to tap into more favorable funding options from foreign allies.
The government plans to borrow Ksh57.4 billion from 13 nations, with France, Japan, China, and Germany among the top contributors. Here’s a breakdown of the expected inflows:
Countries Extending Loans to Kenya (FY 2025/26):
1. France (AFD) – Ksh15.35 billion
2. Germany (KfW) – Ksh10.66 billion
3. China – Ksh9.39 billion
4. Japan – Ksh6.56 billion
5. South Korea – Ksh4.05 billion
6. Israel – Ksh3.40 billion
7. Spain – Ksh3.16 billion
8. Italy – Ksh1.01 billion
9. Saudi Arabia – Ksh1.32 billion
10. Finland – Ksh900 million
11. Hungary – Ksh900 million
12. Belgium – Ksh200 million
13. Kuwait – Ksh550 million
Grand total: Ksh57.43 billion
In addition, a separate Ksh8.6 billion will come in the form of grants from development partners, with the United States, Germany, and France topping the list of non-repayable support.
1. USA (USAID) – Ksh281.56 million
2. Germany (KfW & GIZ) – Ksh3.73 billion
3. France (AFD) – Ksh1.36 billion
4. Japan – Ksh907 million
5. Denmark – Ksh1.21 billion
6. Sweden – Ksh340 million
7. Finland – Ksh500 million
8. Italy – Ksh281 million
9. Belgium – Ksh10 million
Grand total: Ksh8.62 billion
Despite the influx of bilateral and multilateral support, Kenya’s public debt burden continues to grow.
Between July 2023 and June 2024, the government spent Ksh840.73 billion on debt servicing alone.
In the first six months of the current fiscal year (2024/25), interest payments hit Ksh585.63 billion—Ksh444.73 billion on domestic debt and Ksh40.9 billion on external obligations.
If current trends continue, Kenya could surpass Ksh1 trillion in debt interest payments by the end of June 2025—an alarming milestone for a country already grappling with rising inflation, currency depreciation, and public pressure over the cost of living.
The average monthly interest burden has surged to Ksh83.66 billion, up from Ksh70 billion the previous year.
Meanwhile, Kenya’s gross domestic debt has climbed from Ksh5.41 trillion to new highs, driven in part by the government’s aggressive borrowing to fund development projects and plug revenue gaps.
For President Ruto, who campaigned on economic recovery and bottom-up empowerment, the push for foreign financing is a calculated gamble.
By shifting away from high-interest domestic borrowing, the administration hopes to lower the cost of debt and free up space for growth-enabling investments.
But with debt servicing costs rising and global economic conditions tightening, Kenya’s dependence on external funding could become a double-edged sword—one that must be carefully managed if the country hopes to stay afloat and prosper in the years ahead.
