In May 2023, Kenya secured more funding from the IMF under extended credit arrangements. However, austerity demands tied to the deal triggered mass protests and left at least 23 people dead. Economists now warn of an unsustainable fiscal path, urging the government to cut its debt-to-GDP ratio to 55% by 2029.
Public anger over IMF-backed austerity measures sparked nationwide protests in Kenya, leading to 23 deaths and the scrapping of a controversial finance bill. Economists and the Controller of Budget warn that Kenya’s debt trajectory is unsustainable without urgent reforms. Opposition leaders are calling for reduced borrowing, fiscal discipline, and greater transparency in government spending.
Kenya revises tax target to KSh2.4T, citing protests; debt rises to KSh11T. IMF reforms and borrowing fuel fiscal, social tension.
Kenya Slashes Tax Target Again as Public Debt Soars Past KSh11 Trillion
Nairobi, Kenya – July 2025 The Kenyan government has revised its tax revenue target downward for the second time this fiscal year, now aiming to collect KSh 2.4 trillion ($18.5 billion) by June 2025. The decision follows intense nationwide protests over a controversial finance bill, which was eventually withdrawn by President William Ruto’s administration.
To bridge the widening fiscal gap, the Treasury now plans to increase borrowing, sparking renewed concerns over Kenya’s growing debt burden and the sustainability of its economic model.
Debt Surges to KSh11 Trillion
As of January 2025, Kenya’s total public debt has surged to KSh 11.02 trillion, equivalent to 65.7% of the country’s GDP, up from KSh 10.58 trillion in June 2024. The breakdown shows:
Domestic debt: KSh 5.93 trillion
External debt: KSh 5.09 trillion
According to the National Treasury, public debt is projected to exceed KSh 13 trillion by June 2027, driven by persistent revenue shortfalls and high public spending.
IMF Support, Public Resistance
In May 2023, Kenya reached a staff-level agreement with the International Monetary Fund (IMF) to boost funding through the Extended Fund Facility (EFF) and Extended Credit Facility (ECF). While the agreement unlocked much-needed financial resources, it also required the government to undertake tough fiscal reforms, including:
Higher taxes
Reduction in fuel and food subsidies
Broader austerity measures
These IMF-backed policies triggered massive protests, culminating in the deaths of at least 23 people. President Ruto eventually announced the withdrawal of the Finance Bill 2024, but tensions remain high.
“The public rejection of austerity is clear. Any fiscal reform must be socially acceptable,” said Dr. Ruth Achieng, an economist at the University of Nairobi.
Experts, Opposition Warn of Unsustainable Trajectory
Controller of Budget Margaret Nyakango has cautioned that the current debt levels are unsustainable. She has urged the government to bring the debt-to-GDP ratio down to 55% by 2029, in line with IMF-recommended thresholds for developing countries.
Meanwhile, opposition figures have accused the administration of reckless borrowing.
“We are mortgaging our future,” said Opposition Leader Raila Odinga. “The burden of this debt will fall on generations yet unborn.”
They call for a rethink of public financial management, demanding increased transparency and a stronger focus on domestic revenue mobilization through growth-enhancing reforms rather than tax hikes.
What’s at Stake?
Kenya’s ability to maintain social cohesion, attract investor confidence, and navigate fiscal reform hinges on balancing competing demands:
Key Indicator
Status
Debt-to-GDP Ratio
65.7% (Jan 2025)
Tax Revenue Target
Revised to KSh 2.4T
Public Debt Projection (2027)
Over KSh 13T
Finance Bill 2024
Withdrawn after protests
IMF Arrangement
Ongoing under EFF/ECF
“The balancing act between fiscal responsibility and social stability has never been more delicate,” said Faith Njenga, an economist at Stanbic Bank Kenya.
The Road Ahead
Kenya’s economic trajectory now depends on:
The outcome of ongoing IMF negotiations
Public acceptance of any future tax or subsidy reforms
The government’s commitment to fiscal discipline
Investment in productive sectors to boost economic growth
While the withdrawal of the finance bill was a short-term win for public pressure, the broader fiscal crisis remains unresolved. How the government chooses to respond in the coming months will shape not just Kenya’s economy—but its social contract.
