Fergus Kell

UPDATE: Kenya's Final Budget Policy Statement 2026 Two 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 indeed being bumped up per the Cabinet Despatch. It is now set at Kes 4,703.9 billion, Kes 62.0 billion higher than had been projected earlier. The story is in how the + Kes 62.0 billion is being arrived at: 1. Recurrent spending is now set at Kes 3,456.9 billion, an increase of Kes 25.7 billion 2. Development spending is now set at Kes 749.5 billion, Kes 9.6 billion lower than was earlier projected 3. County Transfers at now set at Kes 495.5 billion, Kes 48.9 billion higher than was earlier projected 4. The Contingency Fund allocation is now set at Kes 2.0 billion which is Kes 3.0 billion lower than had been projected earlier Why is Treasury slashing Development Spending that much already? Expectation of deploying proceeds from the Infrastructure Fund to offset? · Total Revenue projection for 2026/27 has now been revised upward by Kes 46.7 billion to Kes 3,533.7 billion. Key thing to note here is that the entire increase is attributable to a revision of the projected AIA collection which is now set at Kes 631.8 billion, Ordinary Revenue projection remains unchanged. In light of this, Tax Laws (Amendment) Bill '26 & Finance Bill '26 will likely remain tax administration leaning as we have seen in the last two tax reform cycles · Total Tax revenue for 2026/27 is projected at Kes 2,901.9 billion. This tells us that KRA is expected to collect an additional Kes 157.5 billion worth of tax revenue in the next financial year compared to the current one Key thing to note here is that it is a marked step down from the ambitious y/y additional tax revenue adjustments we have seen in the recent past. 2025/26 compared to 2024/25 was + Kes 334.5 billion · The 2026/27 Fiscal Deficit is now set at Kes 1,115.8 billion. This means the projected deficit has widened by Kes 9.7 billion compared to what was projected earlier · Important to flag that the borrowing mix has been re-calibrated: 1. Earlier plan was to borrow Kes 1,006.6 billion from the domestic market to plug the deficit. This has now been revised to Kes 890.4 billion 2. Earlier plan was to borrow Kes 99.5 billion from the external market to plug the deficit. This has now been revised to Kes 225.5 billion No surprise around the re-jig in the borrowing to lean more than had been earlier expected towards external financing. After the recent favourable Sovereign Credit Rating actions by both Fitch & Moody's, it's only a matter of time before Kenya launches back to the global capital markets