Kenya projects a slightly reduced budget deficit for the 2025/26 fiscal year (July-June), according to the Ministry of Finance’s February Budget Policy Statement.
The deficit is forecast at 4.3% of GDP, down from 4.9% in 2024/25. Total spending is expected to rise to Ksh 4.34 trillion ($34 billion) from Ksh 3.95 trillion.
The government plans to fund the deficit through Ksh 146.8 billion in net external financing and Ksh 684.2 billion in net domestic financing.
“The fiscal deficit in the FY 2024/25 is expected to be Ksh 862.7 billion (4.9 per cent of GDP). The expenditures to June 2025 will be rationalised to ensure the fiscal deficit is maintained at 4.9 per cent of GDP,” says Treasury.
Kenya Fiscal Projections Summary
| Fiscal Year | Total Revenue (% of GDP) | Ordinary Revenue (% of GDP) | Total Expenditure (% of GDP) | Recurrent Expenditure (% of GDP) | Fiscal Deficit (% of GDP) |
| 2024/25 (Revised) | 17.6 | 14.8 | 22.8 | 16.9 | 4.9 |
| 2025/26 (Projected) | 17.6 | 14.7 | 22.1 | 16.1 | Implied: 4.5 |
| Medium Term (Projected) | 18.1 | 15.5 | 21.1 | 14.7 | Implied: 3.0 |
Key Points
- 2024/25 Revision: Revenue projections lowered due to ordinary revenue shortfall, partially offset by new tax measures. Expenditure rationalized to maintain a 4.9% deficit.
- 2025/26 Projection: Revenue remains at 17.6% of GDP, with a slight decrease in ordinary revenue. Expenditure decreases to 22.1% of GDP. The implied deficit of 4.5% is calculated by subtracting 17.6% from 22.1%.
- Medium Term: Revenue is expected to rise to 18.1% of GDP, driven by increased ordinary revenue. Expenditure is projected to decline further to 21.1% of GDP. The implied deficit of 3.0% is calculated by subtracting 18.1% from 21.1%.
- Fiscal Policy: Focus on growth-friendly consolidation, slowing public debt growth, and enhancing revenue mobilization while protecting priority programs. Development spending will increase progressively over the medium term.
2025/26 Budget: Kenya Allocates KSh199 Billion More Than Planned
