NAIROBI, Kenya – Members of Parliament have sounded the alarm over Kenya’s growing budget deficit, highlighting a revenue gap of Sh253 billion and stalled foreign financing as key threats to the country’s fiscal stability.
A recent report from the National Assembly Budget and Appropriations Committee (BAC) shows that total revenue collected by the end of April stood at Sh2.25 trillion—falling short of the Sh2.5 trillion target by Sh253 billion.
The shortfall has worsened since March when the gap was Sh139.6 billion.
“This revenue underperformance was primarily driven by a shortfall in ordinary revenue collection amounting to Sh195.3 billion and Sh57.7 billion in ministerial appropriations in aid,” the committee noted in the report.
It emphasized the urgent need for stronger revenue mobilisation strategies to safeguard fiscal sustainability and ensure effective budget execution.
The fiscal stress comes just weeks before the end of the financial year on June 30, 2025.
The situation is compounded by delays in external financing, particularly a crucial Sh96.9 billion ($750 million) tranche from the World Bank, originally expected in early June.
National Treasury Cabinet Secretary John Mbadi confirmed the delay, attributing it to postponed parliamentary approval of the Conflict of Interest Bill—a legislative prerequisite for the disbursement.
“The World Bank funding seems to be going to July because some of the legislations that were precedent to the release of these funds were delayed,” Mbadi said.
Kenya’s fiscal year budget had projected total revenue of Sh3.06 trillion, which included Sh2.58 trillion in ordinary revenue (mainly tax collections) and Sh486.8 billion from ministerial collections.
Foreign financing was expected to contribute Sh281.5 billion, with the World Bank loan a significant portion.
Due to the shortfall, the Treasury is now considering a third supplementary budget, as several government departments have already exhausted their allocations.
Economist Churchill Ogutu of IC Asset Managers warned that the widening funding gap could spill into the next financial year, jeopardizing the government’s fiscal consolidation targets.
“The first line of defence is usually to trim the budget, but if recent budget tweaks are a guide, that is unlikely to materialise. So that leaves carryovers into the next financial year or some programmes not being fully funded,” Ogutu said.
With foreign funding delayed and revenue collection lagging, the government may be forced to increase its net domestic borrowing beyond the current target of Sh605.7 billion to fill the financing gap.
Domestic borrowing is considered more immediately accessible compared to external loans.
