World Bank Urges Kenya to Tackle Corruption to Stabilize Debt to GDP

A recent report released by World Bank on Tuesday, November 2, 2025  warns that the Kenya’s debt is surging, however provides recommendations on how to tackle the ballooning debt.

According to World Bank,Kenya’s debt-to-GDP ratio has reached nearly 68 percent.

The shrinking fiscal space has limited investments in infrastructure, education, and health, affecting job creation and productivity.

World Bank reveals debt servicing now consumes more than a third of government revenue, crowding out critical development spending.

At the same time, tax collections have dropped from 16.2% of GDP in 2016/17 to just above 14% , even as 800,000 new workers enter the labor force each year.

The report stresses that fiscal reforms must not only stabilize debt but also create jobs and improve wages.

One of the strongest recommendations as per World Bank is tackling corruption and governance failures.

“Improving procurement, addressing conflicts of interest, and curbing corruption could lower the debt-to-GDP ratio by more than15 percentagepoints over time,” noted World Bank.

World Bank also calls for reforms in five key areas: strengthening governance, creating a competitive private sector, reducing risks from state-owned enterprises, retargeting subsidies and exemptions, and transforming urban fiscal policy.

World Bank highlights thatsubsidies in agriculture disproportionately benefit wealthier farmers, while tax exemptions erode revenues without clear benefits.

World Bank reaffirms Rationalizing these policies could free resources for social protection and private sector liquidity.

The report further highlights the potential of Kenya’s cities, urging expansion of property and land taxation to unlock urban innovation and employment.

World Bank notes that if reforms are implemented, Kenya’s debt-to-GDP ratio could fall to about 44 percent by 2035, compared to a continued rise under current trends.