Nairobi — Kenya expects a wider budget deficit of 5.3% of gross domestic product (GDP) in the 2026/27 fiscal year (July-June), up from 4.7% in 2025/26, the finance ministry said on Friday.
In November, the ministry had estimated the deficit for 2026/27 at 4.9% of GDP, while that for 2025/26 was 4.8%. It said the forecasts were based “the projected revenue and expenditure framework.”
The East African economy has been weighed down with heavy debt repayments in recent years after it increased borrowing to fund infrastructure projects, forcing the government to pursue fiscal consolidation.
The ministry said in its 2026 draft budget policy statement that the budget deficit would be covered by net external borrowing of 99.5 billion shillings ($772.52 million)and net domestic financing of 1.01 trillion shillings.
In November, the ministry said it planned to cover the deficit with net external financing of 241.8 billion shillings and net domestic financing of 775.8 billion shillings for 2026/27.
Kenya’s constitution mandates a detailed, multi-stage budget preparation process involving consultations among the Finance Ministry, lawmakers, and the public, with final approval expected by Parliament in June.
The deficit figures typically evolve during periodic reviews leading up to the presentation.
($1 = 128.8000 Kenyan shillings)
