Kenya's Treasury has warned that a projected budget deficit of Sh1.12 trillion for the upcoming fiscal year poses a significant threat to the nation's fiscal stability, a sharp increase from the previous budget.

• The deficit highlights the unsustainable nature of continued borrowing to bridge the gap between government revenue and expenditure.
• Treasury Principal Secretary Chris Kiptoo emphasized the need for fiscal consolidation and broadening the tax base to ensure more equitable burden-sharing.
• The government plans to finance the deficit primarily through domestic borrowing (Sh924.5 billion), raising concerns about credit availability for the private sector and escalating debt servicing costs.