NAIROBI, Kenya, Nov 20 — President William Ruto heads to Parliament on Thursday for his State of the Nation Address amid mounting pressure over economic performance, revenue collection gaps, debt repayment strains, and growing questions about the credibility of his bottom-up transformation agenda.As he prepares to defend his record, Ruto’s economic scorecard is weighed down by deep structural trade-offs that now hang over his ability to deliver on his promised economic turnaround.Kenya’s high public debt remains one of the most significant economic concerns. According to the latest World Bank Public Finance Review, nearly a third of all tax revenue goes toward interest payments — a stark indicator of how debt servicing is squeezing the country’s fiscal space.The World Bank’s May 2025 economic outlook warned that Kenya remains at “high risk of debt distress” despite modest reforms.Ratings agency Moody’s has also flagged rising debt costs, noting Kenya’s continued reliance on domestic borrowing, which is driving up debt-servicing pressures.The political risk is clear: without credible fiscal consolidation, debt costs could crowd out public services or force politically costly austerity measures.Revenue collection remains an entrenched challenge. Analysts argue that Kenya’s tax base is narrow and inefficient, undermining fiscal sustainability.The Parliamentary Budget Office (PBO) has questioned the realism of the FY 2025/26 revenue target of Sh3.385 trillion, citing a history of shortfalls that political will alone may not fix.EY analysts warn that persistent underperformance in revenue collection — combined with rising recurrent spending — threatens Kenya’s development financing and may trigger further borrowing.Kenya’s growth momentum has cooled. The World Bank recently cut the 2025 GDP growth forecast to 4.5 per cent, citing high domestic debt, elevated interest rates, and weak private-sector credit.Private sector activityPrivate-sector credit contracted sharply, standing at -1.4 per cent in December 2024 — a level that has starved manufacturing, finance, and other productive sectors of capital.Combined with policy uncertainty, this contraction is dampening investment and slowing job creation.The World Bank further notes that despite some macro stabilisation, structural challenges — including insufficient job creation and low wages — persist.External risks such as climate shocks, global rate volatility, and potential fiscal slippage further threaten Kenya’s recovery prospects.The 2025/26 budget signals tighter spending, but experts caution that the path is fragile. The government plans to cap the fiscal deficit at 4.5 per cent of GDP, but analysts say revenue gaps and unforeseen expenditures could widen that deficit.EY reports that shrinking money supply and slowing credit growth are likely to constrain economic expansion, making deficit reduction even more difficult.The World Bank’s Public Finance Review stresses a delicate balance: Kenya must consolidate fiscally without undermining growth. This requires tax reforms, spending rationalisation — especially on inefficient subsidies — and governance improvements to avoid cuts to essential services.WinsOne of the administration’s notable however wins is macro stability. Inflation has eased from earlier highs, while the shilling has steadied, giving households and businesses some relief.A more stable currency reduces import cost volatility, boosts investor confidence, and supports firms that rely heavily on imported inputs.Kenya’s foreign exchange reserves have strengthened, providing a cushion against external shocks. This buffer is crucial as the country navigates heavy debt repayments and works to maintain import cover in a turbulent global environment.Economic planners and the World Bank say Kenya still has an opportunity to reshape its fiscal trajectory. The Public Finance Review outlines a path to reduce the debt-to-GDP ratio to about 44% by 2035 through governance reforms, streamlined spending, and more efficient public financial management.Proposed reforms include broadening the tax base, cutting waste, strengthening procurement systems, and investing in social protection, education, and health.If implemented, these reforms could unlock inclusive growth, create jobs, and restore investor trust — all central to Ruto’s bottom-up narrative.Despite near-term headwinds, the medium-term outlook carries cautious optimism. The World Bank projects GDP growth could rebound to around 5 per cent by 2026–27, assuming reforms remain on track and external risks are managed.Growth is expected to be supported by resilient agriculture, a recovering services sector, improved investment conditions, and strong remittance and export performance.As President Ruto walks into Parliament, he must strike a delicate balance: acknowledge fiscal vulnerabilities honestly while presenting a convincing long-term reform agenda.Can he defend his bottom-up economic strategy while confronting mounting debt distress risks? Will he commit to deeper structural reforms or lean heavily on recent stabilisation gains?His challenge will be to persuade MPs, markets, and the public that Kenya’s macroeconomic stability rests on a foundation strong enough to deliver real, inclusive growth.