Kenya’s budget deficit projected at Sh1.15 trillion as recurrent spending remains elevated

Kenya’s fiscal deficit is projected at about Sh1.145 trillion in the 2026/27 financial year as the government struggles to reduce expenditure while maintaining large recurrent obligations.

The deficit follows an estimated Sh1.265 trillion shortfall in 2025/26.

Large spending commitments for teachers, police, healthcare workers and other public-sector employees are making it harder for the government to achieve its fiscal consolidation targets.

Kenya has been attempting to reduce its deficit as a percentage of GDP, but revenue shortfalls and high recurrent expenditure continue to complicate the adjustment.