Kenya’s Cabinet has approved a record budget of US$37.6 billion (KSh4.7 trillion) for the 2026/2027 financial year, marking the largest expenditure plan in the country’s history, the government said on Tuesday.
The budget, which must still be debated and approved by Parliament, sets total revenues at US$28.2 billion (KSh3.53 trillion), leaving a projected deficit of US$9.4 billion (KSh1.17 trillion) that will require substantial borrowing and other financing measures.
President William Ruto chaired the Cabinet meeting at State House, Nairobi, where ministers endorsed the budget, which is US$800 million (KSh100 billion) higher than the 2025/2026 fiscal plan.
Expenditure priorities and allocations
Of the total budget, development projects will receive US$6 billion (KSh749.5 billion), while US$27.7 billion (KSh3.46 trillion) is earmarked for recurrent expenditure, including salaries, debt servicing, and administrative costs.
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County governments will receive US$3.36 billion (KSh420 billion) as an equitable share under the Division of Revenue Bill, 2026, representing 21.9% of the most recent audited revenue. An additional allocation of US$121 million (KSh15.2 billion) has been set aside for the Equalisation Fund to support historically marginalized regions. The County Governments Additional Allocation Bill, 2026, also proposes a further US$605 million (KSh75.7 billion), bringing total county allocations to US$3.96 billion (KSh495.7 billion).
Cabinet documents highlighted education, health, energy, infrastructure, agriculture, social protection, and national security as priority sectors for budget support.
Macroeconomic outlook
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The government projects Kenya’s Gross Domestic Product (GDP) to grow by 5.3% in 2026, up from an estimated 5% in 2025. The Cabinet cited strong agricultural output, favourable weather conditions, climate-smart investments, and the ongoing implementation of the Bottom-Up Economic Transformation Agenda (BETA) as drivers of growth.
“Macroeconomic fundamentals remain positive, with GDP growth projected to reach 5% in 2025 and 5.3% in 2026,” the statement said.
The budget also emphasizes reforms in state-owned enterprises, public-private partnerships, digitization, and public finance management as key enablers of fiscal sustainability and efficiency.
Public participation and tax policy input
In preparation for the Finance Bill 2026, the National Treasury has invited public, civil society, and private sector input on tax policies to help shape revenue measures. Treasury Cabinet Secretary John Mbadi stressed that citizen and institutional feedback would inform amendments to tax legislation, improving compliance and supporting government priorities.
Implications and financing challenges
Analysts note that the projected deficit of US$9.4 billion underscores the government’s reliance on domestic and international borrowing to finance recurrent spending and development projects. Persistent budget gaps raise concerns about debt sustainability and interest costs, particularly in a context of rising global borrowing rates.
The Cabinet’s approval signals the administration’s commitment to sustaining public investment while stimulating economic growth, even as it faces fiscal pressures.
The 2026/2027 budget marks the fourth Budget Policy Statement under the Kenya Kwanza administration and will guide national fiscal policy for the coming year. Once debated and enacted by Parliament, it will set the framework for expenditure, revenue collection, and strategic investment priorities across the country.
