Nairobi, Aug. 16 -- The Treasury expects Kenya's budget deficit to grow by Sh143 billion to Sh1.288 trillion, driven by higher interest payments on domestic debt and potential tax cuts in the run-up to the 2027 General Election.

A wider budget deficit signals increased borrowing because government spending has surpassed revenues by a larger margin than previously planned.

New expenditure and revenue projections by the Treasury show that the 2026/27 budget is expected to increase by Sh40.5 billion to Sh4.86 trillion, up from the Sh4.82 trillion approved in the June 2026 budget statement.

At the same time, the government is cutting its projected revenue for the year by Sh101.9 billion to Sh3.529 trillion.

Income taxes shoulder the bigge...