Kenya projects 3.5% budget deficit in FY ’25

Kenya’s finance ministry projected a decline in the country’s budget deficit to 3.5 per cent of GDP in the upcoming fiscal year, starting in July 2025. This marks a significant improvement from the 4.3 per cent of GDP deficit recorded in the current fiscal year.

The forecast is outlined in a draft budget document, which was released amidst ongoing economic challenges. President William Ruto faced a major crisis earlier this year when he was forced to scrap tax hikes worth over 346 billion shillings due to widespread protests led by Kenyan youth.

The tax hikes were initially intended to boost government revenue, but the government ultimately opted for spending cuts and increased borrowing to address the budget shortfall.

The finance ministry’s draft budget outlook paper, obtained by Reuters, indicates that the budget deficit is expected to further decrease to 3.3 per cent of GDP in the 2026/27 fiscal year.

Attribution: Reuters

Subediting: M. S. Salama