CS Mbadi proposes debt-for-food swaps as Kenya’s debt hits Ksh.12.8 trillion
CS Mbadi proposes debt-for-food swaps as Kenya’s debt hits Ksh.12.8 trillion
The government is proposing a departure from traditional debt management approaches in a bid to ease the country’s mounting debt burden.
With Kenya’s public debt now standing at Ksh.12.8 trillion, National Treasury Cabinet Secretary John Mbadi says the government is exploring debt-for-food and debt-for-development swaps.
The proposed model would see creditors forgive part of Kenya’s debt in exchange for investments in food production, infrastructure and other critical development sectors.
As pressure mounts over the country’s rising debt levels, the Treasury says the new financing models are aimed at easing repayment obligations while supporting economic growth.
According to Mbadi, the debt-swap arrangements would allow lending nations to cancel portions of debt and redirect the equivalent funds into projects that support food security, infrastructure development and other national priorities.
“The government is considering thematic and liability management instruments such as debt-for-food swaps and debt-for-development swaps,” said Mbadi.
The proposal comes amid growing concern among Kenyans and economic analysts over the rapid expansion of public debt through both external and domestic borrowing.
Kenya’s interest financing obligations currently stand at Ksh.1.25 trillion.
Mbadi said the debt-swap arrangements would not only reduce debt-servicing pressure but also channel resources into sectors that generate economic value and improve livelihoods.
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Data from the latest Budget Implementation Review Report indicates that by March 2026, Kenya’s public debt had risen to Ksh.12.82 trillion.
Of the total debt stock, Ksh.5.68 trillion is owed to external lenders while Ksh.7.14 trillion is domestic debt.
Beyond debt swaps, the Treasury is also seeking to diversify Kenya’s financing sources by tapping into new international capital markets.
The Treasury is also proposing Shariah-compliant investment facilities aimed at attracting more investors and expanding access to liquidity.
“The government is considering the introduction of Sukuk instruments. These Shariah-compliant securities, structured on asset-backed principles, will enable the government to access liquidity,” he added.
In an effort to unlock liquidity in the economy, the government has allocated Ksh.68 billion in the 2026/27 Budget to clear verified pending bills owed to suppliers and contractors.
The move is expected to boost business activity and improve cash circulation.
Under the arrangement, suppliers and contractors with claims of up to Ksh.100 million will be paid over the next two years.
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