Improved Revenue Collection and Fiscal Reforms Seen Supporting Lower Borrowing Needs 
Kenya's budget deficit is projected to narrow in the 2027/28 fiscal year, reflecting the government's continued efforts to strengthen public finances, improve revenue collection and reduce reliance on borrowing, a senior Finance Ministry official has said.
According to the official, the expected reduction in the fiscal deficit is driven by ongoing tax administration reforms, prudent public spending and measures aimed at boosting economic growth. The government remains committed to maintaining fiscal discipline while financing priority development projects.
The projected improvement comes as Kenya continues to implement economic reforms designed to stabilize public debt, enhance investor confidence and support sustainable economic expansion. Authorities have emphasized the importance of balancing infrastructure investment with responsible fiscal management.
Officials said stronger domestic revenue mobilisation, coupled with efforts to broaden the tax base and improve compliance, is expected to increase government income over the medium term. At the same time, the government plans to contain expenditure growth and improve the efficiency of public spending.
The Finance Ministry also reiterated its commitment to reducing the country's debt burden by lowering annual borrowing requirements and strengthening debt management practices. Kenya has faced increasing pressure in recent years to manage rising debt levels while maintaining funding for essential public services and infrastructure.
Economists say a narrower budget deficit could help improve macroeconomic stability, ease pressure on government borrowing and enhance confidence among domestic and international investors. However, they note that achieving the fiscal targets will depend on sustained economic growth, effective tax collection and continued implementation of structural reforms.
The government expects key sectors such as agriculture, manufacturing, tourism and financial services to contribute to stronger economic performance, supporting higher revenue generation and job creation.
International financial institutions have encouraged Kenya to continue implementing fiscal consolidation measures while protecting spending on critical sectors such as healthcare, education and social protection.
If achieved, the projected reduction in the budget deficit would represent another step in Kenya's efforts to strengthen its public finances and create a more resilient economy capable of supporting long-term, inclusive growth.