Grants handed to Kenya to plug the budget deficit are expected to fall by Sh5.7 billion in the new fiscal year starting July 1, on lower disbursements by foreign governments.
Total grants expected to flow to the Exchequer are estimated at Sh46.9 billion from Sh52.6 billion in the current financial year.
The lower grants are amid a global assessment of donations to programmes such as health and social protection by countries, including the US termination of its aid initiative, the United States Agency for International Development (USAid).
Grants in the context of the budget refer to the money given to the government that does not need to be repaid.
The Treasury receives grants from various sources, like the Global Fund, among other development partners, to support various projects and initiatives in areas such as health and infrastructure.
The Global Fund is, for instance, a significant source of grants for the Treasury, particularly for health programmes such as HIV/Aids. Grants to the Exchequer can either be conditional-bare specific requirements for how funds are spent or be unconditional with lesser conditions on the use of funds.
The Sh46.9 billion expected grants in the 2025-26 fiscal year are to partly offset the fiscal balance of Sh923.1 billion, bringing the deficit after the inclusion of the donations to Sh876.1 billion.
Grants from foreign governments are set to fall from Sh20.5 billion to Sh15.5 billion in the fiscal year to June 2026, while grants from international organisations will fall from Sh32.1 billion to Sh31.3 billion.
The fall in grants due from international organisations includes no new inflows to the African Union Mission in Somalia, which has provided grants to Kenya for its participation in the peacekeeping mission.
Amison grants in the current financial year have been tabulated at Sh2.1 billion, according to the financial statement for the fiscal year 2025-26 by the Treasury.
According to preliminary data from the Organisation for Economic Co-operation and Development, international aid from official donors decreased by 7.1 percent in 2024 to end a five-year period.
The drop was primarily attributed to budget cuts, particularly from major donors like the US and Germany.
The fall in international aid is set to be affected by significant cuts and restructuring within the US administration, which primarily ended funding to the USAid. The USAid was a major funder of key projects in Kenya, especially health.
The gap in financing is only likely to be filled by new donors or require budgetary resources from the National Treasury, a tall task amid a tight fiscal space with the exchequer under pressure to maintain the 2025-26 budget deficit at no more than 4.5 percent of gross domestic product.
