The National Treasury has reduced spending on development projects as the government continues to face growing pressure from rising debt payments.
New fiscal data for February 2026 shows that development spending dropped to Ksh20.71 billion, the lowest level in the past six months.
The cut comes as a large amount of government money is now going toward paying debt and running daily government operations.
The data shows that debt service payments reached Ksh115.66 billion, making it one of the biggest expenses in the national budget.
This amount is close to the government’s recurrent spending of Ksh138.13 billion, which covers salaries, government operations, and other routine costs.
Govt Under Pressure
According to the figures, the amount used in debt service was more than five times the amount sent to development projects, showing how repayments are increasingly replacing capital investment.
Despite the squeeze, tax revenue grew strongly, with the treasury collecting Ksh172.35 billion in taxes during the month, a 13.5 per cent increase compared with the same period last year.
By the end of February, cumulative tax collections had reached Ksh 1.516 trillion, about 58 per cent of the full‑year target.
However, the improved revenue performance did not translate into increased funding for development projects, as a growing share of available funds was directed toward debt repayments.
As a result, the Treasury figures show that the government relied heavily on borrowing to meet its obligations, with net domestic borrowing standing at Ksh137.55 billion during the month.
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External loans and grants contributed Ksh253.61 billion during the same period, while non-tax revenue collections stood at Ksh89.94 billion.
Domestic borrowing, mainly through treasury bills and bonds sold to banks and investors, now accounts for a major share of the government’s financing strategy.
Treasury’s Spending Data
Spending data also shows large allocations to the security sector and government administration.
The National Police Service received about Ksh83 billion, while the National Intelligence Service obtained more than Ksh47 billion in exchequer releases.
The Ministry of Defence also recorded significant spending, receiving over Ksh120 billion in funds released from the national budget.
Meanwhile, counties continued to receive constitutionally mandated transfers from the national government.
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The Treasury released Ksh35.28 billion as the equitable share to county governments during the month.
Kenya’s Debt
Among bilateral lenders, China is the largest, with Kenya owing about KSh882.5 billion, roughly 70 percent of all bilateral debt.
Chinese loans financed major projects including the Mombasa–Nairobi Standard Gauge Railway, which cost over Ksh360 billion, as well as the Nairobi Southern Bypass, the Garissa Solar Power Plant, and the Kenyatta University Teaching, Referral and Research Hospital.
Other key creditors include France, which has lent Kenya about Ksh109.7 billion mainly for urban development and water projects, and Japan, which is owed roughly Ksh99 billion and has supported transport, industrial and energy projects.
Germany has also financed infrastructure and renewable energy programmes, with loans of about Ksh44.7 billion.
Beyond individual countries, Kenya owes large amounts to international lenders.
The World Bank remains the largest external creditor through its lending arm, the International Development Association, holding about KSh1.57 trillion of Kenya’s external debt.
The International Monetary Fund is also a major lender with more than Ksh461 billion in loans tied to economic reform programmes, while the African Development Bank accounts for more than Ksh500 billion.
With development spending at a six-month low, key infrastructure and social projects are being executed more slowly despite improved revenue collection.
As Kenya has more repayments falling due in the coming months, pressure on public finances is expected to persist.
