Cabinet Secretary John Mbadi of the National Treasury is expected to present the first supplementary budget for the 2026/27 financial year in November.
The mini budget will incorporate recently approved Cabinet expenditures, including the settlement of pending bills of KSh50 million and below, which will raise overall spending for the fiscal year ending June 30, 2027.
Principal Secretary Chris Kiptoo told the Finance and National Planning Committee of the National Assembly on Tuesday that the supplementary budget will contain submissions on clearing most pending bills, and that the Treasury is devising a way to pay them, though a decision on securitising the arrears or funding them through the budget has not yet been made.
The Treasury projects the 2026/27 budget deficit at 5.5 per cent of GDP, equivalent to KSh1.14 trillion, and expects it to rise to 5.9 per cent in 2027/28.
Spending for the fiscal year to June 2027 is estimated at KSh4.81 trillion against projected revenues of KSh3.63 trillion.
The Cabinet earlier approved the settlement of pending bills of KSh50 million and below, with payments aimed at micro, small and medium enterprises to ease cash-flow pressures, protect jobs and restore confidence among suppliers and contractors.
The Treasury has already cleared pending road-sector bills estimated at KSh80 billion through securitisation of the road maintenance levy fund, which is funded by a KSh25 charge per litre of petrol and diesel.
The Cabinet also approved a KSh45.5 billion shareholder financing package for Kenya Airways to meet urgent obligations, including aircraft maintenance and returning grounded planes to service, and proposed converting KSh122 billion of existing government loans to equity to strengthen the airline’s balance sheet.
Treasury officials note heightened funding demands from ministries and state departments despite revenue underperformance, and warn that public debt has surpassed KSh13 trillion as of August 2026.
Principal Secretary Kiptoo said spending pressures are very high, with frequent requests from MDAs for more money while revenue growth cannot keep pace.
The Kenya Revenue Authority recorded a KSh58.2 billion revenue shortfall in the first quarter of the current fiscal year, even as ordinary revenue receipts rose 14.4 per cent to KSh655.8 billion from KSh573.5 billion in the same period of 2025.
Domestic revenue collection also recovered from the previous year, when receipts had contracted by 2.9 per cent in the opening quarter of the 2025/26 fiscal year.
By the end of September 2026, revenue collection was below target by KSh40.4 billion, mainly due to the ordinary revenue shortfall, while ministerial appropriations in aid exceeded the target by KSh17.8 billion.
Total revenues are expected to reach KSh3.63 trillion by June next year, up from KSh3.19 trillion, comprising KSh2.985 trillion in ordinary revenues and KSh644.8 billion in ministerial A-i-A, and the new supplementary estimates will reflect these revised revenue expectations.
