By CPA Peter Kibet Kitur Kenya’s Fy2026/27 Post-Budget Analysis The Budget comes at a particularly uncertain time for the global economy. Escalating geopolitical tensions across the Middle East, the continuing conflict between Russia and Ukraine, growing strategic rivalry between the United States and China, increasing trade protectionism, and persistent disruptions to global supply chains continue to reshape international trade and financial markets. These developments have heightened uncertainty over commodity prices, capital flows, inflation, and investor confidence. As a highly import-dependent economy with significant external financing needs, Kenya remains particularly vulnerable to these global shocks. Although Kenya has demonstrated resilience, the domestic economy has not been immune.According to the Kenya National Bureau of Statistics (KNBS), real GDP growth slowed from 5.7 per cent in 2023 to 4.7 per cent in 2024, with growth estimated at approximately 4.6 per cent in 2025. Agriculture, financial services, construction, transport, mining, real estate, and tourism remained the principal drivers of economic activity. While exports increased to approximately KSh 1.1 trillion, Kenya continues to record a substantial trade deficit and relies heavily on imported fuel, industrial inputs, machinery, pharmaceuticals, and food products. This dependence exposes the country to external inflationary pressures that remain largely beyond domestic policy control. The FY2026/27 Budget provides for expenditure of KSh 4.82 trillion against projected revenues of KSh 3.63 trillion, resulting in a fiscal deficit of KSh 1.146 trillion, which will mainly be financed through domestic borrowing. Although the Government aims to reduce the fiscal deficit to 3.3 per cent of GDP by FY2028/29, achieving this objective appears increasingly challenging. Revenue projections depend on successful tax reforms, stronger compliance, and sustained economic expansion—assumptions that have consistently proven optimistic. Kenya has repeatedly experienced revenue shortfalls due to delayed reforms, administrative inefficiencies, tax avoidance, and a narrowing effective tax base. Unless economic growth substantially exceeds recent performance, revenue targets may once again fall short.