- The 2025 Treasury Budget Policy Statement revealed that the fiscal deficit will be financed by external loans of KSh 213.7 billion and domestic financing of KSh 545.8 billion
- The government proposed a budget of KSh 4.4 trillion for the next financial year, with regular expenditure including KSh 3.07 trillion for salaries and benefits
- The Ruto administration expects to collect KSh 3 trillion in general revenue from taxes and levies, with counties expected to receive KSh 442.7 billion
Presidential Administration William Ruto intends to borrow KSh 759.4 billion in the 2025/2026 financial year (FY) to cover the budget deficit.
Source: Twitter
How the government will close the budget deficit
The 2025 Treasury Budget Policy Statement revealed that the fiscal deficit will be financed by external loans of KSh 213.7 billion (1.1% of GDP) and domestic financing of KSh 545.8 billion (2.8% of GDP).
“Reflecting expenditure and revenue estimates, the fiscal deficit, including subsidies, is estimated at KSh 759.4 billion (3.9% of GDP) in the 2025/26 Financial Year, compared to KSh 768.6 billion (4.3% of GDP) in the Year 2024/25, “The treasure has been revealed.
The government will use the entire amount to finance the development expenditure even if it risks defaulting on its loans.
“The debt sustainability analysis conducted by the International Monetary Fund (IMF) shows that Kenya's public debt remains sustainable as a middle performer in terms of debt carrying capacity (DCC). However, there is a significant risk of facing debt distress due to international debt shocks that lead to a slowdown in economic growth.” The Treasury said.
How much is Kenya's budget for the year 2025/2025?
The government has proposed a budget of KSh 4.4 trillion in the next financial year.
The expenditure will include KSh 3.07 trillion for regular activities and KSh 804.7 billion for development projects.
The fund will send KSh 442.7 billion to the county while the Emergency Fund will be allocated KSh 5 billion.
The Ruto administration hopes to collect KSh 3 trillion in general revenue from taxes and levies.
“In the Financial Year 2025/26 the total revenue including Aid Expenditure (AiA) is estimated to be KSh 3,516.6 billion (18.2% of the National GDP) from the estimated KSh 3,060.0 billion (16.9% of the National GDP) in the Year 2024/25, ordinary income is estimated to reach KSh 3,018.8 billion (15.7% of GDP of the Nation) from an estimate of KSh 2,631.4 billion (14.6% of the National GDP) in the Financial Year 2024/25,” Treasury estimated.
What is Kenya's debt?
The Treasury estimated that the national debt will reach KSh 13.2 trillion by June 2027, from KSh 10.3 trillion in June 2023.
The Treasury noted that domestic and foreign debt are expected to increase to KSh 6.82 trillion and KSh 6.4 trillion, respectively.
However, the Treasury estimates that total public debt as a share of GDP is expected to decrease from 70.8 percent at the end of June 2023 to 57.7 percent at the end of June 2027.
What to know about the Kenyan economy
- Ruto admitted that the country's economy is struggling, with many Kenyans struggling to put food on the table.
- Kenya's economy grew by 4% in the third quarter of 2024 compared to 6% in the corresponding quarter of 2023.
- The president's adviser on economic affairs, Moses Kuria, pointed out that Kenya is stuck and is facing many financial challenges.
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