NAIROBI (Reuters) - Kenya's government plans to raise spending in the 2009/10 fiscal year to 865.8 billion shillings, according to government budget estimates released on Wednesday. Kenyan Finance Minister Uhuru Kenyatta will unveil the budget on Thursday and analysts expect him to boost development spending and stimulate the economy against the backdrop of dwindling local and external sources of finance. The estimates showed recurrent government spending will rise 8.7 percent to 606.7 billion Kenya shilling from an estimted 558.2 billion in the 12 months to the end of June. According to KTN television, development spending was slated to be 258.9 billion shillings in the fiscal year starting in July, a 32 percent increase from an initial estimate for 2008/09 of 196.2 billion. The latest estimate for development spending in the current fiscal year was not immediately available. Analysts will now be watching the budget speech on Thursday closely to see how the extra money will be raised given that receipts are likely to be hit by the global economic slowdown and relatively weak growth in Kenya. There are market concerns that a heavy borrowing programme on domestic markets could push up short-term interest rates and crowd out investment in the private sector. The government has postponed plans to issue its first Eurobond due to the financial crisis, but if this project is revived it would provide some new external funding and potentially ease some of the worries in local markets. The budget estimates showed the aid contribution to recurrent government spending in 2009/10 would be 41.8 billion shillings, up from 40.6 billion a year earlier. The aid contribution to development spending was not immediately available. | 
