NAIROBI, Kenya- Kenya’s Final Budget Policy Statement (BPS) for 2026/27 was tabled in the National Assembly yesterday, confirming a total budget size of Sh4,703.9 billion, up Sh62.0 billion from earlier projections.
The statement comes two days after the Cabinet Despatch outlined preliminary figures.
The increase is largely driven by county transfers and recurrent spending, while allocations for development and contingency funds have been reduced, signaling a shift in the government’s fiscal strategy.
Key allocations for 2026/27 include:
- Recurrent spending: Sh3,456.9 billion, up Sh25.7 billion from previous projections.
- Development spending: Sh749.5 billion, down Sh9.6 billion. Analysts suggest the reduction may reflect an expectation of utilizing proceeds from the Infrastructure Fund to support capital projects.
- County transfers: Sh495.5 billion, up Sh48.9 billion, highlighting the government’s continued emphasis on devolved funding.
- Contingency fund: Sh2.0 billion, down Sh3.0 billion.
On the revenue side, the total projection for 2026/27 has risen to Sh3,533.7 billion, an increase of Sh46.7 billion, entirely attributable to a revision in Appropriation-in-Aid (AIA) collections, now projected at Sh631.8 billion.
UPDATE: Kenya’s Final Budget Policy Statement 2026Two days after the Cabinet Despatch teased out the Final Budget Policy Statement 2026, it is finally out having been tabled in the National Assembly yesterday.What are we seeing here?· The size of the 2026/27 Budget is
Ordinary revenue projections remain unchanged, suggesting the Tax Laws (Amendment) Bill 2026 and Finance Bill 2026 will focus on improving tax administration rather than introducing significant new taxes.
Tax collection targets indicate that the Kenya Revenue Authority (KRA) is expected to raise Sh2,901.9 billion, or an additional Sh157.5 billion over the current year, a marked slowdown compared to the previous year’s jump of Sh334.5 billion.
The fiscal deficit is projected at Sh1,115.8 billion, widening by Sh9.7 billion from earlier estimates.
This comes amid a recalibration of the government’s borrowing mix:
- Domestic borrowing has been reduced from Sh1,006.6 billion to Sh890.4 billion.
- External borrowing has increased from Sh99.5 billion to Sh225.5 billion, reflecting confidence in recent sovereign credit rating upgrades by Fitch and Moody’s. Analysts expect Kenya to re-enter global capital markets in the near term.
The BPS underscores the government’s continued commitment to balancing recurrent obligations, county transfers, and development priorities while maintaining fiscal discipline amid modest revenue growth.
Observers note that the shift toward external financing and the slower tax revenue growth signal a cautious approach to borrowing and fiscal management in 2026/27.
As Parliament deliberates the Budget Policy Statement, stakeholders will be watching closely how development projects will be financed and whether the government can achieve its deficit and revenue targets while sustaining service delivery at both national and county levels.
