By Ukumbi Afrika 
Nairobi—Kenya's budget deficit is projected to narrow to 5.7% of gross domestic product (GDP) in the 2027/28 fiscal year, from an estimated 6.2% in 2026/27, according to the Finance Ministry’s latest budget outlook.
The projected decline points to a modest improvement in Kenya’s fiscal position as the government seeks to manage borrowing needs and contain the gap between expenditure and revenue.
The ministry said net domestic financing is expected to rise to 1.09 trillion Kenyan shillings ($8.4 billion) in 2027/28, from 1.04 trillion shillings in the current fiscal year.
Meanwhile, net external financing is forecast to decline to 235.9 billion shillings in 2027/28, from 247.2 billion shillings in 2026/27.
The figures underscore Kenya’s continued reliance on domestic borrowing to finance its budget deficit, even as the government projects a gradual reduction in the overall deficit relative to the size of the economy.
Kenya's fiscal outlook remains closely watched by investors and policymakers as the government balances debt-servicing pressures, development spending and efforts to strengthen domestic revenue collection.
The latest projections form part of the government’s medium-term fiscal planning framework.
2026/27 budget deficit: 6.2% of GDP
2027/28 projected deficit: 5.7% of GDP
2026/27 net domestic financing: KSh1.04 trillion
2027/28 net domestic financing: KSh1.09 trillion
2026/27 net external financing: KSh247.2 billion
2027/28 net external financing: KSh235.9 billion
Exchange rate: $1 = KSh129.25
Source: Reuters
Reporting: George Obulutsa & Vincent Mumo Nzilani
Editing: Emelia Sithole-Matarise