Kenya expects to have a slightly narrower budget deficit and a modest increase in overall spending in its 2025/26 (July-June) fiscal year compared with the year that ends in June, the finance ministry said on Friday.

The deficit is projected to stand at 4.3 per cent of gross domestic product (GDP) in 2025/26, down from 4.9 per cent of GDP in 2024/25, according to the ministry’s Budget Policy Statement for February.

Overall spending is set to increase to Ksh4.34 trillion ($34 billion) in 2025/26 from Ksh3.95 trillion (30.5 billion) in the year ending in June, the ministry said.

The government plans to finance the deficit with net external financing of Ksh146.8 billion ($1.2 billion) and net domestic financing of Ksh684.2 billion ($5.3 billion) s, the ministry said.

President William Ruto was forced to scrap tax increases 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 presidency.

• A Reuters report