Kenya’s tax revenue collections rose by 14.85 per cent to Sh258.31 billion in September, offering a boost to government revenue mobilisation as the Treasury faces pressure to meet its annual targets and finance rising expenditure.
The National Treasury’s September fiscal outturn update shows that the government continued to rely on domestic borrowing and external financing to support its spending obligations during the third month of the 2026/27 financial year.
Domestic borrowing amounted to Sh101.72 billion, while external loans and grants contributed Sh54.05 billion. Non-tax revenue stood at Sh13.95 billion, with other domestic financing contributing Sh364.39 million.
The September tax collections formed part of a broader improvement in revenue performance during the first quarter of the financial year.
Treasury data for the three months to September showed that ordinary revenue, comprising tax and non-tax receipts, increased by 14.4 per cent to Sh655.8 billion from Sh573.5 billion in the corresponding period last year.
“Tax revenue collected: KSh258.31 billion, up 14.85%,” the Treasury update states.
The update also reported public debt service of Sh109.66 billion during the period.
Despite the growth in collections, the Kenya Revenue Authority recorded a Sh58.2 billion shortfall against its ordinary revenue target in the first quarter, highlighting the challenge of raising sufficient funds to finance the national budget.
Income tax accounted for the largest shortfall, with collections reaching Sh297.9 billion against a target of Sh323.3 billion.
Excise duty receipts also fell Sh16.3 billion below target, while import duty was the only major tax category to exceed its collection target.
The shortfall means that stronger year-on-year revenue growth has not fully translated into meeting the government’s budget expectations.
On expenditure, the Treasury’s September update reported recurrent spending of Sh140.25 billion and development expenditure of Sh60.22 billion.
Public debt service amounted to Sh109.66 billion, while county governments received Sh40.66 billion through the equitable share.
The figures reflect competing demands on public finances, with the government required to fund essential services, implement development projects and meet its debt obligations.
Continued reliance on borrowing and external financing also highlights the importance of improving revenue collection to support government operations and reduce pressure on other sources of funding.
Kenya has set an annual tax revenue target of approximately Sh2.86 trillion for the 2026/27 financial year. However, the Treasury has revised some revenue projections amid slower economic growth.
The September performance will therefore be assessed not only by the annual increase in tax collections but also by the government’s ability to close the gap between actual receipts and budget targets.
Sustained revenue growth will be important in helping the government finance its spending commitments while managing borrowing needs and public debt obligations.
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