The Draft Budget Policy Statement for the 2027/28 financial year puts total government spending at Sh5.416 trillion, up from the Sh5.323 trillion outlined two months earlier.

Recurrent expenditure – covering salaries, operations, debt service and other routine obligations – is projected at Sh4.021 trillion, equivalent to about 17.5 % of GDP, marking the first time it has crossed the Sh4 trillion threshold.

That recurrent figure represents an increase from the earlier estimate of Sh3.887 trillion and is well above the roughly Sh3.09 trillion expected for the current 2026/27 fiscal year.

Development spending has been trimmed to Sh915.8 billion, down from the previous projection of Sh958 billion, indicating tighter funding for infrastructure and investment programmes.

The Treasury has raised its revenue forecast to Sh4.004 trillion (17.4 % of GDP), with ordinary revenue from taxes and other receipts expected to reach Sh3.249 trillion.

Despite higher revenue expectations, the budget still anticipates a fiscal deficit of Sh1.353 trillion – about 5.9 % of GDP – wider than the previously projected deficit of Sh1.321 trillion.

To finance the gap, the government plans to borrow Sh929.1 billion domestically, a reduction from the earlier estimate of Sh1.085 trillion, while external borrowing is set to rise to Sh423.8 billion from Sh235.9 billion.

The National Treasury has opened a public consultation on the draft budget, inviting comments until 16 November before finalising spending priorities and the fiscal framework for the next financial year.