Kenya expects to have a slightly narrower budget deficit and a modest increase in overall spending in its 2025/26 (July-June) fiscal year compared with the year that ends in June, the finance ministry said on Friday.

The deficit is projected to stand at 4.3% of gross domestic product (GDP) in 2025/26, down from 4.9% of GDP in 2024/25, according to the ministry's Budget Policy Statement for February.

Overall spending is set to increase to 4.34-trillion shillings ($34-billion) in 2025/26 from 3.95-trillion shillings in the year ending in June, the ministry said.

The government plans to finance the deficit with net external financing of 146.8-billion shillings and net domestic financing of 684.2-billion shillings, the ministry said.

President William Ruto was forced to scrap tax increases worth more than 346-billion shillings ($2.7-billion) in June in the face of youth-led demonstrations that created the biggest crisis of his presidency.