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Loan default risks persist on high public sector pending bills
Kenya’s pending bills owed to contractors and suppliers have continued to grow, with unpaid obligations increasing to Sh524.84 billion by June 2025, up from Sh516.27 billion earlier in the financial year, according to figures from the office of the controller of budget.
Kenyan banks’ are facing increased loan default risks as their impaired loan ratio –which stood at 17.6 percent as of June— is expected to remain high into 2026 due to large outstanding public-sector arrears.
The pending bills have adversely impacted borrowers’ debt servicing capacity, global rating agency Fitch warns.
