Treasury Cabinet John Mbadi is expected to table a budget statement containing spending plans of at least Sh4.23 trillion on June 12, 2025.
The budget statement in the National Assembly is expected to highlight the government’s spending priorities for the fiscal year running from July 1, 2025, to June 30, 2026, and the proposed measures to fund the budget.
What does the Sh4.23 trillion spending estimates entail?
About Sh3.1 trillion of the total budget covers day to day spending also known as recurrent expenditure.
Slightly over Sh1 trillion is expected to foot interest payments on both domestic and foreign debt in the fiscal cycle.
A further Sh190.3 billion will cater for pension payments for the country’s retirees and fund salaries to constitutional offices.
Another Sh37 billion represents the government’s contribution to the civil service pension fund. Wages and salaries for the civil service will gobble up Sh624.7 billion.
Spending on development projects will take up a partly Sh613.5 billion albeit an improvement from Sh546.4 billion in the current financial year while countries will share out Sh474.9 billion including the equitable share and conditional allocations.
How will the Sh4.23 trillion expenditures be funded?
The budget summary for the fiscal year 2025/26 assumes revenue estimates of Sh3.3 trillion out of which Sh2.75 trillion is from taxes while the balance of Sh559.9 billion represents fees and other collections by Ministries and other government agents referred to as appropriations in aid or A-i-A.
Grants from foreign countries and organisations will meanwhile cover a further Sh46.9 billion of the budget leaving behind a balance of Sh876.1 billion referred to as the fiscal deficit or funding gap.
What of the Finance Bill?
The proposed Finance Bill 2025, is a move away from previous new revenue measures as it is expected to yield only Sh25 to Sh30 billion in new receipts.
The new tax measures have been modest following the fallout from an escalation in tax measures proposed last year which led to countrywide street protests which ended with the abandonment of the Finance Bill, 2024.
The bulk of new revenue measures covers changes to tax procedures and the amendment of the VAT Act for zero rating and exempt status.
The 2025/26 budget deficit is tabulated at 4.5 percent of GDP or Sh876.1 billion. The government has set the target for net foreign financing at Sh284.2 billion while net domestic borrowing is set at Sh591.9 billion.
Where will Kenya find the funding?
Net domestic borrowing will be fully funded from the issuance of domestic Treasury bills and bonds and other forms of domestic financing such as the CBK overdraft in case of shortfalls.
Net foreign financing will meanwhile be a mix between commercial and concessional sources.
Part of concessional or cheap financing will be mopped from the World Bank’s development policy operations (DPO) and the African Development Bank (AfDB) which commercial borrowing is largely a choice between sovereign bonds and syndicated loans or both.
What happens before the budget statement is tabled on June 12?
The National Assembly is expected to undertake the review of draft budget estimates and write a report on the proposed estimates.
The National Treasury will meanwhile consolidate the final budget estimates and submit the appropriations bill in Parliament.
What happens after June 12?
Members of Parliament are expected to pass both the Appropriation Bill and the Finance Bill before June 30.
Most of the new tax measures will then take effect on July 1 while the remaining provisions will kick in on January 1, 2026.
Could we see changes to tax proposals before they are passed?
The government or members of the public could alter the form of the Finance Bill, 2025 by moving proposals to the measures proposed by the Treasury.
Fresh public proposal must find the support of the National Assembly Committee on Finance and National Planning which is Chaired by Molo MP Kuria Kimani.
Other proposals by the government must fight majority support from MPs during the adoption of the bill in Parliament.
Who are the most crucial players in the passage of the budget?
The National Assembly Committee on Finance and National Planning alongside MPs are expected to take the centre stage in the adoption of both the budget estimates and the passage of the Appropriations Bill and the Finance Bill.
National Treasury Cabinet Secretary John Mbadi will mostly have a ceremonial role but the budget statement, to be made on June 12, is set to be crucial in explaining away the government’s agenda over the next 12 months from July 1.
Members of the public will also play a crucial role in backing or rejecting new tax proposals.
When did the budget process start?
The budget making process began in late August last year with the development and issuance of the 2025/26 financial year budget preparation guidelines.
The budget making process was then launched by the exchequer in September 2024 and was followed by programme performance reviews, the development of the medium-term budget framework and the preparation of sector budget proposals.
