Economic Indicators

Kenya forecasts budget deficit will fall to 3.5% of GDP next fiscal year

2024.09.17 04:00

NAIROBI (Reuters) – Kenya’s finance ministry forecasts a fall in the budget deficit to 3.5% of gross domestic product (GDP) in the 2025/26 fiscal year that starts next July, from 4.3% of GDP in the current fiscal year, a draft budget document showed.

President William Ruto scrapped tax hikes worth more than 346 billion shillings ($2.7 billion) in June in the face of youth-led demonstrations that created the biggest crisis of his two-year-old presidency.

The tax hikes were meant to increase revenue this fiscal year, but the government opted for spending cuts and more borrowing after they were pulled.

© Reuters. FILE PHOTO: A worker carries a bale of imported second-hand clothes past displayed apparel at the Gikomba market in Nairobi, Kenya, September 18, 2020. REUTERS/Thomas Mukoya

The budget deficit is expected to drop further to 3.3% of GDP in the 2026/27 fiscal year, the finance ministry said in the draft budget outlook paper seen by Reuters on Tuesday.

($1 = 128.5000 Kenyan shillings)



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