Kenya Raises KSh643 Billion in Domestic Borrowing as SIB Projects 5% Economic Growth in 2026

Kenya’s government raised KSh643 billion from the domestic debt market in the third quarter of 2026, exceeding its initial borrowing target as investor demand for Treasury securities remained strong, even as inflationary pressures and rising external financing needs cloud the economic outlook.

According to Standard Investment Bank’s (SIB) Third Quarter 2026 Fixed Income and Economic Report, the Central Bank of Kenya (CBK) sought to raise KSh465 billion during the quarter, up from KSh295 billion in the second quarter. Investors submitted bids worth KSh965 billion, representing a subscription rate of 207%, with the government accepting KSh643 billion.

The strong uptake reflects continued investor appetite for government securities and the availability of liquidity in the domestic market. However, the increased reliance on local borrowing also points to mounting pressure on the Treasury to finance government operations amid constrained external funding.

SIB reported that the government recorded a domestic borrowing surplus of KSh595 billion, equivalent to 35.3% of its KSh919 billion net domestic borrowing target for the 2026/27 financial year. The early mobilisation of funds provides the government with some headroom against its annual borrowing requirements.

External financing remains constrained, with the report noting that no International Monetary Fund disbursements had been received to date and that flexibility from project-linked loans remained limited. This has increased the importance of the domestic capital market in meeting the government’s financing needs.

The borrowing activity comes against a cautiously improving economic outlook, with the Monetary Policy Committee (MPC) maintaining the Central Bank Rate (CBR) at 8.75% during its October 7, 2026 meeting while upgrading its economic growth outlook.

The report indicates that the CBK raised its 2026 economic growth projection to 5.0%, from 4.9%, reflecting an assessment of improving economic conditions. However, the monetary policy committee retained a cautious stance, citing the need to anchor inflation expectations and preserve exchange-rate stability.

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