Revenue projected to hit Sh3.6 trillion in 2026-27 financial year - Mbadi

Treasury Cabinet Secretary John Mbadi presents 2026-27 budget proposals to Parliament on June 11, 2026. /SCREENGRAB

Treasury Cabinet Secretary John Mbadi has projected total government revenue collections of Sh3.63 trillion in the 2026-27 financial year as the government seeks to sustain economic growth while pursuing fiscal consolidation measures aimed at containing public debt.

Presenting the 2026-27 Budget Statement in the National Assembly on Thursday, Mbadi said the projected revenue represents 17.4 per cent of the country’s Gross Domestic Product (GDP).

Of the total revenue target, ordinary revenue is expected to contribute Sh2.99 trillion, equivalent to 14.3 per cent of GDP, while Appropriations-in-Aid are projected at Sh644.8 billion, accounting for 3.1 per cent of GDP.

The government also expects to receive grants amounting to Sh43.6 billion, equivalent to 0.2 per cent of GDP.

The revenue projections come against the backdrop of continued efforts by the Kenya Kwanza administration to strengthen domestic revenue mobilisation and reduce reliance on borrowing to finance government operations.

Mbadi said total government expenditure for the financial year beginning July 1, 2026, is projected at Sh4.82 trillion, representing 23.2 per cent of GDP.

A significant portion of the expenditure will go towards recurrent spending, which is projected at Sh3.57 trillion or 17.1 per cent of GDP. Recurrent expenditure largely caters for salaries, pensions, debt servicing and the day-to-day running of government operations.

Development expenditure has been allocated Sh750 billion, equivalent to 3.6 per cent of GDP, reflecting the government's commitment to funding infrastructure projects and other priority programmes intended to spur economic growth and job creation.

County governments are set to receive Sh502 billion in shareable revenue from the national government.

Out of this amount, Sh428 billion will be disbursed as the equitable share allocation to support devolved functions and service delivery across the 47 counties.

Despite the ambitious revenue targets, the government is expected to operate with a fiscal deficit of Sh1.146 trillion during the 2026-27 financial year.

The deficit, which includes grants, is equivalent to 5.5 per cent of GDP. To bridge the financing gap, the Treasury plans to borrow both locally and externally.

Mbadi said the government will finance the deficit through net external borrowing of Sh116.2 billion, equivalent to 0.6 per cent of GDP, and net domestic borrowing of Sh1.03 trillion, representing 4.9 per cent of GDP.

The heavy reliance on domestic borrowing underscores the government's strategy of reducing exposure to external debt and exchange rate risks while maintaining access to financing for key public programmes.

Mbadi said the government remains committed to restoring fiscal sustainability through a combination of enhanced revenue collection, prudent expenditure management and improved efficiency in the use of public resources.

“To preserve debt sustainability and strengthen economic resilience, the government will continue implementing fiscal consolidation measures anchored on enhanced domestic revenue mobilisation, strict expenditure controls and improved efficiency in public spending,” Mbadi said.

The budget projections set the stage for another year of balancing growing expenditure demands with the need to contain borrowing and place public finances on a more sustainable path.