)
)
Treasury Cabinet Secretary John Mbadi has assured Kenyans that the government is making significant strides in economic recovery, fiscal discipline, and easing financial burdens on citizens.
Speaking during a session with the National Treasury team, Mbadi highlighted key economic improvements, including a reduction in public debt, a stronger shilling, lower interest rates, and a rebound in credit availability.
)
Public Debt Reduction and Economic Growth
)
)
)
Kenya’s public debt-to-GDP ratio has dropped from 71.9% in June 2022 to 66.7% in June 2024, a result of fiscal consolidation efforts, including prudent tax policies and controlled government spending.
Mbadi noted that the total stock of public debt stood at Ksh 10.56 trillion as of mid-2024, with projections indicating a further decline.
The country’s economy recorded a steady growth trajectory in 2024, with GDP expanding by 5.0% in Q1, 4.6% in Q2, and 4.0% in Q3.
The overall annual growth rate for 2024 was revised to 4.6%, with expectations of a rebound to 5.3% in 2025 and 2026.
Forex Stability and Rising Diaspora Remittances
The exchange rate has strengthened significantly, with the Kenyan shilling appreciating to Ksh 129.4 against the U.S. dollar by January 2025, compared to Ksh 160.8 a year earlier.
Diaspora remittances, a key contributor to foreign exchange inflows, surged by 16.7% to USD 4.87 billion in 2024, compared to USD 4.17 billion in 2023.
Additionally, official foreign exchange reserves stood at USD 10.09 billion, covering 5.1 months of imports, ensuring market stability.
Monetary Policy Easing and Lower Interest Rates
The Central Bank of Kenya (CBK) has responded to improving economic conditions by easing monetary policy, cutting the Central Bank Rate (CBR) from 13% in August 2024 to 10.75% in February 2025.
The Cash Reserve Ratio (CRR) was also reduced from 4.25% to 3.25%, allowing commercial banks to lower their lending rates.
Several banks have already responded by slashing interest rates, with Co-op Bank reducing its base lending rate from 16.5% to 14.5%, KCB from 15.6% to 14.6%, and Equity from 17.3% to 14.3%.
)
Mbadi expects further rate reductions, which will encourage private sector credit expansion, boost investments, and enhance liquidity in the economy.
Inflation Decline and Cost of Living Relief
The government’s interventions in food and energy pricing have led to a decline in inflation from 9.6% in October 2022 to 3.3% in January 2025.
This drop in inflation is expected to provide relief to Kenyans struggling with the cost of living.
Pending Bills and MSME Support
Mbadi acknowledged that pending bills remain a pressing issue, particularly affecting micro, small, and medium enterprises (MSMEs).
He emphasised the government’s commitment to resolving these delays, which have constrained liquidity and economic activity.
A National Treasury committee investigating pending bills has identified key challenges, including budget mismatches, lack of exchequer disbursements, and mid-year budget cuts.
To address these concerns, the government is implementing reforms such as e-procurement, stricter public investment management regulations, and prioritizing payments to businesses owned by women, youth, and persons with disabilities.
)
Capital Markets and Foreign Investments
Investor confidence in Kenya’s capital markets is rising, with the Nairobi Securities Exchange (NSE) showing marked improvement.
The NSE 20 Share Index climbed to 2,162.6 points in January 2025 from 1,509 points a year earlier, while market capitalization increased from Ksh 1.44 trillion to Ksh 1.98 trillion.
Government’s Commitment to Economic Resilience
Mbadi reaffirmed the government’s commitment to ensuring economic gains translate into financial relief for Kenyans.
“The government is here for all Kenyans. We are not oblivious to your realities, and we are implementing policies that promote liquidity and economic stability,” he stated.
)
As the year progresses, Treasury projects continued economic recovery, strengthened financial systems, and improved household incomes, reinforcing its commitment to putting money back into Kenyans' pockets.