NAIROBI, Kenya — The National Treasury has announced plans to begin publicly disclosing the size of debt restructuring operations it intends to undertake, including buybacks, bond switches, and swaps, in a move aimed at improving transparency and accountability in public debt management.
Under the new approach, the Treasury will give advance information on the scale of liability management operations (LMOs) designed to replace maturing debt with new instruments that either extend repayment periods or carry lower interest rates, easing pressure on government finances.
Previously, early repayments of bonds using proceeds from new debt issues were executed without public disclosure of the amounts involved, limiting parliamentary and public oversight.
“The National Treasury shall budget for liability management operations within the national budget and fiscal framework,” the Treasury said in a policy statement.
“A specific LMO vote line in the annual budget estimates under the public debt management shall be provisioned with adequate estimates every year.”
The reforms come as Kenya continues to grapple with a heavy debt burden and rising refinancing risks, particularly on external commercial debt and short-term domestic instruments.
To strengthen institutional oversight, the Treasury plans to establish a dedicated liability management unit within the Public Debt Directorate.
The unit will be responsible for monitoring the debt portfolio, planning restructuring operations, and guiding annual budget provisions for debt management activities.
Kenya has increasingly relied on buybacks to ease Eurobond repayment pressures.
In one of the most significant operations, the government partially repaid its inaugural Sh258 billion ($2 billion) Eurobond due in June 2024, calming investor fears of a potential default that had pushed the shilling to a record low in January 2024.
The Treasury repaid about Sh186.1 billion ($1.44 billion) using proceeds from a new Sh193.5 billion ($1.5 billion) Eurobond, effectively spreading repayments across maturities in 2029, 2030, and 2031.
Further early repayments were executed in 2025 on Eurobonds due in 2027 and 2028.
These reduced projected redemptions from Sh116.1 billion ($900 million) and Sh129 billion ($1 billion) to Sh27.4 billion ($213 million) and Sh47.9 billion ($372 million), respectively.
The government has also announced plans for additional early Eurobond repayments, including a proposed debt-for-food-security swap backed by a Sh129 billion ($1 billion) guarantee from the United States International Development Finance Corporation.
Beyond external debt, the Treasury has deployed bond switches to manage domestic refinancing risks. In a bond switch, investors exchange an existing security for a longer-dated one, often with revised interest terms.
The first domestic switch was introduced in June 2020, when holders of a one-year Treasury bill were offered a six-year infrastructure bond.
A second switch in December 2022 targeted maturing Treasury bills and resulted in Sh47.8 billion raised through a Sh87.8 billion six-year infrastructure bond.
Most recently, investors holding a 10-year bond maturing in August 2026 rolled over Sh26.49 billion into a 15-year bond, marking the first domestic switch of the current fiscal year.
The Treasury maintains that the enhanced disclosure framework will support smoother debt repayments, lower borrowing costs and reinforce public trust in the management of Kenya’s debt portfolio.
