East Africa’s finance ministers recently presented their national budgets for the 2025/26 fiscal year. These budgets, shaped by unique national challenges and priorities, also reveal regional trends. Among the East African nations, Kenya stands out for its significant spending plan compared to Tanzania and Uganda. Knowclick Media examines Kenya’s 2025/26 budget in the context of its neighbors, highlighting fiscal strategies, priorities, and the potential impact on regional economic integration.
Kenya: A Balancing Act Between Debt and Relief
Kenya’s 2025/26 budget, unveiled by Finance Minister John Mbadi, totals USD 32.5 Billion. As the largest budget in East Africa, it reflects the government’s ambition to address economic recovery and public debt while avoiding new tax burdens on individuals.
Key Highlights of Kenya’s Budget:
- Fiscal Deficit: The budget aims to cap the fiscal deficit at 4.5% of GDP, a reduction from the previous year’s 5.1% target.
- Revenue Projections: Kenya’s revenue is projected to grow to KSh 3.52 trillion (~18.2% of GDP), up from KSh 3.06 trillion (~16.9% of GDP) in 2024/25.
- Borrowing Needs: Total borrowing is estimated at KSh 759.5 billion, slightly down from KSh 768.5 billion in the prior year.
The Kenyan government has prioritized tax compliance and enforcement to increase revenues. Measures to digitize tax systems and enhance efficiency aim to close revenue gaps without imposing additional tax burdens. The government’s decision to avoid new taxes reflects sensitivity to public discontent over last year’s contentious tax increases.
Kenya’s debt-to-GDP ratio remains high at approximately 66%. The country is working to rebuild credibility with the International Monetary Fund (IMF), which paused its $3.6 billion support program citing fiscal concerns.
Tanzania: Conservative Growth Within Limits
Tanzania’s 2025/26 budget, presented by Finance Minister Mwigulu Nchemba, is projected at USD 21.93 Billion. While significantly smaller than Kenya’s, it reflects a more conservative approach to fiscal planning.
Key Highlights of Tanzania’s Budget:
- Budget Composition: About 96% of the budget is allocated to recurrent expenditure, with a modest 4% dedicated to development projects.
- Economic Growth: Tanzania’s economy is projected to grow at a robust 6.0%, slightly above Kenya’s estimated 4.8%.
Tanzania has focused on fiscal stability, maintaining a debt-to-GDP ratio of around 47%, one of the lowest in the region. The government’s cautious approach aligns with its strategy to sustain economic growth while managing public debt effectively.
Uganda: Ambitious Goals, Tight Constraints
Uganda’s budget for the 2025/26 fiscal year stands at USD 7.55 Billion. Despite limited fiscal space, the government remains committed to ambitious development goals.
Key Highlights of Uganda’s Budget:
- Revenue Projections: Tax revenues are expected to reach UShs 36 trillion, representing steady growth.
- Development Focus: The government has emphasized infrastructure development, particularly in energy and transportation, to drive long-term growth.
Uganda’s debt-to-GDP ratio is around 51%, and fiscal deficits remain a challenge. The government’s ability to achieve its ambitious economic targets will depend on its success in mobilizing domestic revenues and attracting foreign investment.
Read: How Safaricom and KPC Will Help Fund Kenya’s Sh 4.24 Tn Budget
Comparative Analysis: Kenya, Tanzania, and Uganda
A side-by-side comparison of the three budgets highlights key similarities and differences:
Country | Budget Size | Fiscal Deficit (% GDP) | Debt-to-GDP Ratio | Growth Projection |
|---|---|---|---|---|
Kenya | $ 32.5 Bn | 4.5% | ~66% | ~4.8% |
Tanzania | $ 21.93 Bn | ~3–4% (estimated) | ~47% | ~6.0% |
Uganda | $ 7.55 Bn | ~4–5% | ~51% | ~5–6% |
Regional Themes and Challenges
Fiscal Consolidation
All three countries are working to narrow their fiscal deficits through expenditure control and enhanced revenue collection. Kenya and Uganda have made cuts to non-essential spending, while Tanzania’s conservative budget reflects its prioritization of fiscal stability.
Infrastructure Investment
Infrastructure development remains a shared priority, with significant allocations to roads, railways, and energy projects. These investments aim to boost economic growth and regional connectivity.
Regional Integration
Despite shared membership in the East African Community (EAC), the budgets reveal limited explicit focus on regional economic integration. Each nation’s budget reflects domestic political and economic considerations, with minimal coordination on cross-border projects or fiscal harmonization.
Implications for East Africa
Kenya’s large-scale budget underscores its role as a regional economic leader, but its high debt levels pose risks to long-term sustainability. Tanzania’s cautious fiscal strategy offers stability but may limit its ability to drive transformative growth. Uganda’s ambitious development plans highlight its potential but rely heavily on effective execution and external support.
For investors, analysts, and policymakers, these budgets provide a window into each nation’s priorities and challenges. The ability to implement these budgets effectively will determine the region’s economic trajectory in the coming years.
Final Thoughts
Kenya’s 2025/26 budget stands out for its scale and ambition, but execution will be key to its success. Tanzania’s steady approach and Uganda’s ambitious plans add depth to East Africa’s fiscal narrative. As the region navigates economic recovery and growth, these budgets reflect both shared goals and individual strategies, offering insights into the future of East Africa’s integration and development.
