Kenya will cap its budget deficit at 4.5 per cent of GDP in the 2025/26 fiscal year, down from 5.1 per cent the year before, as the government adopts new austerity measures and prepares a major revision to its 4.3 trillion Kenyan shilling ($33 billion) budget, the cabinet announced on Tuesday. The shift comes after mass protests last year forced President William Ruto to withdraw proposed tax hikes worth $2.7 billion and abandon plans to reduce the deficit to 3.5 per cent, triggering the most severe political crisis of his presidency. The cabinet said the latest measures aim to cut public debt risks and free up resources for essential services. It also approved the Finance Bill 2025, which focuses on closing tax loopholes and boosting efficiency. The announcement follows market turmoil in March after Kenya and the IMF abandoned the final review of their $3.6 billion support programme. The IMF confirmed last week that Kenya has requested a new deal to help manage its worsening cash shortage. Attribution: Reuters Subediting: M. S. Salama
