Key facts
- East African finance ministers presented budgets for the 2026/27 fiscal year.
- Budgets aim to shield economies from Iran war cost shocks and manage debt.
- Kenya's finance minister warned geopolitical events could hinder deficit reduction.
- Uganda projects double-digit growth starting next fiscal year due to oil production.
- The African Development Bank revised East Africa's growth forecast down to 5% for 2026.
- Tanzania plans to increase domestic revenue collection due to reduced foreign financing and debt pressures.
- Tanzania sees potential opportunities from the Iran war for transshipment services and attracting investment.
Finance ministers across East Africa presented their 2026/27 budgets on Thursday, navigating concerns over economic shocks from the Iran war and existing debt pressures. Kenya's finance minister cautioned that global geopolitical events could impede the country's ability to reduce its fiscal deficit, while Uganda's counterpart projected a significant boost in economic growth driven by the anticipated commencement of oil production.
The region's vulnerability to trade disruptions, particularly concerning fuel and fertilizer imports, has led the African Development Bank to halve its growth forecast for East Africa this year to 5%. Kenya's finance minister outlined a deficit reduction plan, aiming to reach 3% by the 2028/29 fiscal year, but acknowledged risks from climate shocks, commodity price volatility, and tighter financial conditions.
In contrast, Uganda's Finance Minister Henry Musasizi announced a 3.5% budget increase, projecting a return to double-digit growth of 10.2% starting next month with the onset of commercial oil production. This is expected to expand the economy, create jobs, and generate resources for public services.
Tanzania's Finance Minister Mussa Omar indicated a strategic shift towards enhancing domestic revenue collection, citing reduced financing from foreign nations and mounting debt pressures. The government anticipates economic growth of 6.3% this year. Planning Minister Kitila Mkumbo suggested the Iran war could create opportunities for Tanzania, such as providing transshipment services for ships rerouted from Middle Eastern ports and attracting investors seeking safer havens.