East African Nations Unveil Budgets Amid Iran War Economic Concerns

East African countries, including Kenya, Uganda, Tanzania, Ethiopia, and Rwanda, are unveiling their 2026/27 budgets amid concerns over the economic impact of the Iran war. Investors are focused on how governments will manage rising fuel costs, inflation, and debt. While Kenya faces pressure to reduce its budget deficit and strengthen public finances, Tanzania sees opportunities to attract investment and expand trade services despite the conflict.

 Finance ministers in Kenya, Uganda, and Tanzania are set to present their 2026/27 national budgets to parliament on Thursday, with investors closely watching how the governments intend to protect their economies from rising costs linked to the ongoing Iran war while maintaining control over public debt levels.

East Africa is regarded as particularly vulnerable to disruptions caused by the conflict because of its heavy dependence on imported fuel and fertilisers. Concerns over higher energy costs, inflation, and trade disruptions have already prompted the African Development Bank to lower its growth forecast for the region this year by half a percentage point.
The financial year in East African countries runs from July to June, making the annual budget presentations an important indicator of government priorities and economic direction. Ethiopia and Rwanda are also scheduled to unveil their budgets on Thursday.
In Kenya, the region’s largest economy, attention is focused on how Finance Minister John Mbadi will manage high debt repayments, slower economic growth, a temporary reduction in petroleum taxes, and a wide fiscal deficit. The country has recently witnessed deadly protests linked to rising fuel prices and the increasing cost of living.
Andrew Matheny, a senior economist at Goldman Sachs, said Kenya’s Treasury has consistently failed to meet budget targets in recent years, while the fiscal balance has remained in a primary deficit. According to him, this has not been enough to stabilise public debt or restore investor confidence.
He noted that financial markets would be looking for signs of a more credible fiscal strategy, either through spending cuts or effective revenue-generating measures that can reduce the budget deficit and strengthen public finances.
Earlier this month, Kenya’s finance ministry projected a budget deficit of 5.4 percent of gross domestic product for the fiscal year beginning next month, an improvement from the estimated 6.4 percent deficit recorded in the current financial year.
President William Ruto, who is expected to seek re-election next year, has intensified efforts to increase government revenue through stricter tax enforcement. However, some government agencies have complained about delays in funding, while many households argue that higher taxes have reduced their disposable income and increased financial pressure.
In neighbouring Uganda, analysts have warned that rising fuel prices resulting from the Iran conflict could place additional strain on government spending plans and economic management efforts.
Tanzania, however, has expressed optimism about the situation. The government expects the economy to grow by 6.3 percent this year, up from 5.9 percent last year, and believes the conflict could create new economic opportunities.
Speaking ahead of the budget presentation, Planning Minister Kitila Mkumbo said Tanzania could benefit from increased demand for transhipment services as some ships face difficulties delivering cargo to ports in the Middle East. He said this could boost activity at Tanzanian ports and strengthen the country's role in regional trade.
Mkumbo also argued that the conflict could encourage investors to move capital away from the Gulf region in search of safer destinations. He said Tanzania could position itself as an attractive alternative, particularly in sectors such as natural gas production and other strategic investments.
As East African governments unveil their spending plans, investors and analysts will be assessing whether the proposed budgets can successfully balance economic growth, fiscal discipline, debt sustainability, and protection against external shocks arising from the conflict in the Middle East. :::