NAIROBI, Kenya Apr 1 – The National Treasury has sounded the alarm over the country’s growing reliance on borrowing to finance its budget, warning that the trend could undermine fiscal stability as the deficit widens to Sh1.12 trillion.Appearing before the National Assembly’s Public Debt and Privatisation Committee, Treasury Principal Secretary Chris Kiptoo revealed that the projected deficit marks a sharp rise from the Sh901 billion approved in the June 2025 budget.Kiptoo cautioned that continued borrowing to plug the gap between revenue and expenditure is becoming increasingly untenable, even as the government grapples with mounting spending pressures and sluggish revenue growth.“Borrowing is not sustainable. Without meaningful fiscal consolidation, it will be very difficult going forward,” he told the committee.He emphasized the need to broaden the tax base, noting that the current burden is disproportionately carried by compliant taxpayers. “We want taxation to be more equitable. Those complying are shouldering the load, while many others are yet to come on board,” he said.The PS said the Treasury is pursuing fiscal consolidation measures aimed at stabilising public finances while still supporting development priorities. He added that the Kenya Revenue Authority will be strengthened to expand revenue collection, amid growing resistance from Kenyans to new taxes.Under the current plan, the government intends to finance the bulk of the deficit through domestic borrowing, estimated at Sh924.5 billion, with an additional Sh229.8 billion expected from external sources.Economists warn that the heavy reliance on local borrowing could tighten credit availability, as government demand for funds competes with private sector borrowing, potentially slowing business activity and economic growth.At the same time, even the relatively lower level of foreign borrowing adds to Kenya’s debt stock, raising concerns over increasing debt servicing costs.Lawmakers in the committee, chaired by Abdi Shurie, blamed the swelling public debt on what they termed as fiscal indiscipline within the Treasury, particularly the tendency to overestimate revenues, leading to shortfalls that must be financed through borrowing.“When revenues are not increasing, why continue expanding expenditure?” Shurie posed.Kiptoo also highlighted rising recurrent expenditure, pointing to an increase in the wage bill driven by enhanced salaries and benefits for constitutional and independent offices.Allocations for salaries and allowances are projected at Sh5 billion, up from Sh4.6 billion in the approved estimates, largely due to the implementation of the third remuneration review cycle, as well as gratuity payments for outgoing state officers and anticipated costs linked to the appointment of judges.Meanwhile, the pensions budget is expected to remain unchanged at Sh234 billion.The latest disclosures pile pressure on the government to rein in spending, boost revenue mobilisation, and reduce dependence on debt as it seeks to maintain economic stability.