NAIROBI, Dec 19 – Kenya expects its budget deficit to widen to 5.3% of gross domestic product in the 2026/27 fiscal year, up from 4.7% in 2025/26, according to the finance ministry.
The new projection marks an upward revision from estimates released in November, when the ministry forecast a deficit of 4.9% of GDP for 2026/27 and 4.8% for the current fiscal year. The ministry said the revised outlook reflects updated revenue and expenditure assumptions.
Africa’s largest economy in East Africa has been under pressure from heavy debt repayments following years of increased borrowing to fund large-scale infrastructure projects. These obligations have pushed the government to pursue tighter fiscal consolidation measures.
In its draft 2026 budget policy statement, the ministry said the deficit would be financed through net external borrowing of 99.5 billion shillings, equivalent to about $772.5 million, alongside net domestic financing of 1.01 trillion shillings.
By comparison, the November projections envisaged net external financing of 241.8 billion shillings and net domestic financing of 775.8 billion shillings for the same fiscal year.
Kenya’s constitution requires a multi-stage budget process that includes consultations with lawmakers and the public. The final budget is expected to be approved by parliament in June, and deficit figures typically evolve during reviews leading up to that stage.
