The FY 2026/27 Budget Statement, delivered by National Treasury Cabinet Secretary Hon. John Mbadi, reaffirms the Government’s commitment to its core development strategy under the theme “Sustaining the Bottom-Up Economic Transformation Agenda (BETA) for Resilient and Inclusive Growth amid Global Uncertainty”.  

Central to the fiscal framework is a medium-term consolidation path aimed at reducing the fiscal deficit from 5.5% of GDP in the current financial year to 3.3% by FY 2028/29. The Government signals a deliberate shift away from debt-dependent financing models, seeking to address an estimated annual infrastructure gap of USD5 billion through expanded use of Public-Private Partnerships (PPPs) and the newly operationalised National Infrastructure Fund (NIF).  

From a macroeconomic perspective, the budget is anchored on a resilient domestic economy despite a constrained global environment. Real GDP growth is projected at 5.0% in 2026 and 5.2% in 2027, building on 4.6% growth recorded in 2025. Although global oil price pressures pushed inflation to 6.7% in May 2026, it remains within the Government’s target band of 5±2.5%. The exchange rate has remained broadly stable, averaging KSh 129.4 per US dollar, supported by foreign exchange reserves of USD13.2 billion, equivalent to 5.6 months of import cover. In addition, easing credit conditions have supported private sector lending, which expanded by 9.3% in the year to May 2026.  

On the fiscal revenue front, total collections are projected at KSh 3.63 trillion (17.4% of GDP) for FY 2026/27. This is primarily driven by KSh 2.98 trillion in ordinary revenue and KSh 644.8 billion in Ministerial Appropriation-in-Aid, reflecting improvements in administrative efficiency and institutional revenue mobilisation. In contrast, external support through grants is projected at KSh 43.6 billion, reinforcing the ongoing shift towards domestically anchored financing.  

FY 2026/27 Resource Allocation  

The FY 2026/27 resource allocation framework is anchored on the Bottom-Up Economic Transformation Agenda (BETA) and aligned with the Fourth Medium Term Plan of Vision 2030. The Education sector receives the largest allocation at KSh 784.5 billion. National Security ranks second at KSh 567.4 billion. County Governments receive the third-largest share at KSh 502 billion to support devolution and strengthen subnational service delivery. The fourth- and fifth-largest allocations go to the Roads and Transport sector at approximately KSh 258.8 billion and the Environmental Protection, Water, and Natural Resources sector at KSh 124.8 billion.