Debt repayments ate 92 percent of taxes in the three months to September, underlining the burden of servicing the mounting public loans that have left little for development projects.
Treasury data shows that Kenya paid Sh509.6 billion to creditors in the three months against taxes of Sh553.7 billion, leaving a measly Sh43.9 billion for State operations.
This means that for every Sh100 collected in taxes, Sh92 went to service debt.
This left a meagre Sh8 out of every Sh100 for government operations, from paying civil servants to buying medicines and building roads and bridges.
The rise in debt service costs comes at a time when Kenya is struggling to expand tax revenue in the wake of protests from Gen-Zs that blocked levies worth Sh345 billion in the Finance Bill 2024.
This has triggered expenditure cuts and reduced project spending that is key in driving economic growth and easing the growing youth unemployment.
Kenya has witnessed a rising share of debt repayments relative to taxes in recent years and in tandem with the widening public debt. Debt service stood at Sh347.2 billion in the three months to September 2023, or 67.5 percent of tax revenues and 62 percent in the same period last year.
The government spent a paltry Sh43.31 billion on development projects in the quarter against a full-year target of Sh407.1 billion.
The spending accounted for 4.5 percent of State expenditure in the three months.
Over the past six years, tax revenue for the July to September periods has risen nearly 49 percent to Sh553.7 billion from Sh372.3 billion in 2019.
During the same period, debt service costs have more than doubled from Sh214.8 billion to Sh509.6 billion, reflecting the growing mismatch between revenue growth and debt obligations.
Public debt has increased from Sh1.81 trillion in 2013 to Sh10.9 trillion in December, representing 67.4 percent of the gross domestic product.