Kenya’s growing reliance on international sovereign credit pushed the country’s external debt stock higher in the third quarter of 2025.
According to the latest figures by the Kenya National Bureau of Statistics (KNBS), the stock of external debt liabilities rose by 3.4 per cent to Sh5.618 trillion by the end of September 2025.
This is from Sh5.434 trillion at the end of September in 2024.
The statistical agency attributes much of the increase to Kenya’s return to international capital markets earlier in the year.
“The increase in the stock of external debt liabilities was majorly attributable to a 19.9 per cent increase in the stock of International Sovereign Bond following issuance of these debt securities in March and June 2025,” KNBS said.
Notably, external loans continue to account for the largest share of Kenya’s foreign liabilities, making up 76.4 per cent of the total external debt stock at Sh4.29 trillion.
Within this category, loans from multilateral lenders rose by 7.4 per cent to Sh3.06 trillion, underscoring the government’s sustained engagement with institutions such as the World Bank and the African Development Bank.
In contrast, debt owed to bilateral lenders and commercial banks declined during the period.
Stock of debt from bilateral sources fell by 5.7 per cent to Sh996.5 billion, while commercial bank debt dropped sharply by 28.3 per cent to Sh223.8 billion, a reduction attributed to a debt restructuring exercise undertaken in July 2025.
The report further reveals shifting investor behaviour in Kenya’s domestic debt market.
Non-resident holdings of Treasury bonds declined to Sh298.8 billion by the end of September 2025 from Sh349.4 billion a year earlier, even as foreign holdings of Treasury bills rose by 36.2 per cent to Sh4.1 billion.
The rise in external debt comes against the backdrop of widening external imbalances.
KNBS notes that the current account deficit expanded sharply to Sh135.3 billion in the period under review, up from Sh43.5 billion in the same period of 2024, driven largely by a wider merchandise trade deficit and a weaker services surplus.
Imports grew faster than exports during the quarter, with higher spending on industrial machinery, iron and steel, and road motor vehicles pushing the trade gap wider.
At the same time, net external financing fell by 57.8 per cent to Sh25.7 billion, while a Sh63.7 billion drawdown in reserve assets pointed to increased debt servicing pressures during the period.