The National Treasury has warned of potential fiscal instability as Kenya's budget deficit climbs to Sh1.12 trillion, a significant increase from the previous budget and largely financed through borrowing.

• The projected deficit of Sh1.12 trillion is a sharp rise from the Sh901 billion approved for the June 2025 budget.
• Treasury Principal Secretary Chris Kiptoo stressed that continued reliance on borrowing is unsustainable.
• The government plans to finance the deficit predominantly through domestic borrowing (Sh924.5 billion) and a smaller portion from external sources (Sh229.8 billion).