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Mbadi to MPs: We will not stop borrowing
National Treasury Cabinet Secretary John Mbadi on March 18, 2025 when he appeared before the Senate Finance and Budget Committee at County Hall, Nairobi.
National Treasury Cabinet Secretary John Mbadi has said the government will not stop borrowing despite questions raised by senators on how the huge loans taken by the state are being spent.
The development comes even as the minister said Treasury will conduct a forensic audit of the country's public debt stock, which currently stands at Sh11.2 trillion.
Appearing before the Senate Finance and Budget Committee on Tuesday, CS Mbadi maintained that the government will not stop seeking loans from international lending institutions as they have services to offer.
According to the fiscal policy statement for the year ending June 2026, the government proposes to borrow Sh684.2 billion from the domestic market and Sh146.8 billion from external markets to bridge the projected deficit for the year under review.
The shift from external borrowing is due to a reduction in receipts from the IMF programme. Kenya had set the external borrowing target for the fiscal year ending June 2025 at Sh168 billion.
Mombasa Senator Mohamed Faki pressed the minister to tell Kenyans how the huge loans are being used, saying they wonder why the country is always in debt when there are questions about how the money is being spent.
The lawmaker said the government's appetite for borrowing has seen public debt balloon to over Sh11 trillion.
Kenya, which is struggling with heavy debt, has been scrambling for fresh funding after the deadly Gen Z protests in June and July last year forced the withdrawal of the controversial 2024 Finance Bill, setting the government back by at least Sh346 billion.
Currently, the Kenya Revenue Authority is under pressure to collect at least Sh1.07 trillion in just four months to June 2025, equivalent to Sh267.8 billion per month, at a time when its average monthly collection is Sh175.46 billion.
The government has so far reduced its tax targets from an initial Sh2.9 trillion to Sh2.47 trillion in the face of poor collections.
Between July 2024 and February 2025, the tax authority collected Sh1.4 trillion, or 56.7 percent of its revised annual target.
For his part, CS Mbadi told the committee, chaired by Mandera Senator Ali Roba, that he was aware that trust in President William Ruto's administration was low.
However, the former Suba South MP said they are working round the clock to ensure that government funds are spent prudently to reduce wastage, especially on borrowed funds as they will eventually be returned.
He cited an example of a Sh42 billion loan taken by the National Treasury on August 22, 2022, a few days after the General Election, and wondered what the urgency was given the change in government.
Kenya's total debt to GDP (gross domestic product) stood at 65.7 percent as of June last year, according to National Treasury data, well above the 55 percent level considered a sustainable threshold.
The minister acknowledged the need for a strategy to reduce the debt level, which is why Auditor-General Nancy Gathungu's office has been engaged.
“We have asked all ministries to redirect resources to where they are required to avoid non expenditure of government funds, especially loans that we have gotten from donors since we have Sh1.3 trillion committed for various functions but not disbursed,” the CS said.
At the same time, Senator Boni Khalwale of Kakamega asked Mr Mbadi to tell the committee why some Sh29.9 billion meant for devolved functions had been retained by the national government.
But the minister deftly sidestepped the question, saying he would respond after seeing a report on the matter.
On the stalemate between governors and MPs over the Road Maintenance Levy Fund, the National Treasury boss said it was unfortunate that the impasse was affecting the disbursement of additional allocations to counties.
“This matter needs to be resolved so as not to affect service delivery. I would like to request the two parties to look for a way of resolving the political differences that have hindered the additional allocation of funds to counties since it is the wish of the National Treasury seeing devolution work,” he said.
Meanwhile, the CS apologised to the committee for failing to appear before it on two previous occasions, saying he had been engaged with IMF officials on the first occasion while on the second occasion he was attending a Cabinet meeting.
“I would like to inform Senators that it is not my intention to downplay the role of the Senate in the budget making process. I have been an MP for many years and I understand the crucial role you play,” said the CS.