Kenya’s budget deficit is projected to rise to 5.9% of gross domestic product (GDP) in the 2027/28 fiscal year, up from 5.5% in 2026/27, according to the Finance Ministry.
The ministry said net domestic financing is expected to fall to 929.1 billion Kenyan shillings ($7.17 billion) in 2027/28, from 1.04 trillion shillings in the current fiscal year.
Net external financing, however, is projected to increase to 423.8 billion shillings, compared with 247.2 billion shillings in 2026/27, indicating a greater expected contribution from external borrowing and financing sources.
The projected increase comes as Kenya seeks to finance public spending while managing mounting debt obligations and pressure on government revenues. The country has been exploring alternative funding instruments, including international bond issuances, to meet its financing needs and manage borrowing costs.
The 2027/28 fiscal year begins in July 2027. Kenya is expected to present its next budget earlier than usual because general elections are scheduled for August 2027, the ministry said.
The projected deficit will be closely watched by investors and policymakers as Kenya balances development spending, debt sustainability and the need to maintain economic stability.
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