Interest payments on public debts will cost taxpayers Sh5 trillion over the next five years, new data by the Treasury shows.
In the Budget Summary for 2024/25, the Treasury projects that the government will spend an equivalent of Sh2.8 billion a day on interest payments during fiscal years 2023/24 to 2027/28, underlining the burden of public debt.
Interest payments on public debt are a mandatory charge on the Consolidated Fund Services (CFS) and constitute the first item before any other expenditure.
The Sh5 trillion is the cost taxpayers have to pay lenders for loans the government has spent on projects and non-development activities.
CFS allocation
During the current fiscal year which ends in June, the government is expected to spend Sh630.6 billion on domestic interest payments, and Sh229.4 billion on external debt interest.
This is expected to rise to Sh260 billion for external interest payments and Sh750 billion for domestic interest payments in the fiscal year starting July, as interest costs are projected to keep rising up to June 2028.
“The CFS has been allocated Sh1.21 trillion in the FY 2024/25. This includes allocations to cater for domestic interest payment of Sh749.9 billion and foreign interest payment of Sh259.9 billion, pension, salaries & allowances of Sh203.6 billion,” the Treasury states in the document.
In the domestic market, interest payments will rise to Sh771.2 billion in 2025/26, Sh800 billion in 2026/27 and Sh830.6 billion in the year ending June 2028, it added.
Interest payments on domestic debts are expected to total Sh3.78 trillion in five years as the debt service costs continue to take more than half of the taxes collected.
