The members of Kenya’s Cabinet led by President William Ruto approved the 2025 Budget Policy Statement which recommends a complete KSh 4.2 trillion budget for the 2025/26 financial year on February 12, 2025.
Twenty-two percent of the national Gross Domestic Product serves as the basis for this budget which displays the government’s dedication to responsible fiscal management and sustainable development.
Recurrent government services will operate smoothly through KSh 3.09 trillion of proposed budget expenditures. A substantial portion of funding KSh 725.1 billion targets development projects because the government wants to focus on both infrastructure development and long-term economic expansion. The Ministry requests KSh 5 billion through the Contingency Fund for unforeseen budget needs.
The Division of Revenue Bill 2025 contains KSh 2.8 trillion as the proposed shareable revenue for the national government. County governments will receive KSh 405.1 billion as an equitable share from KSh 2.8 trillion national government funds together with KSh 10.6 billion dedicated to the Equalisation Fund.
The current constitution stipulates this amount of funds which makes up 25.8% of audited revenue for counties. The national government along with development partners will provide an extra KSh 69.8 billion which amounts to KSh 12.89 billion from the national government and KSh 56.91 billion from development partners to elevate county budget resources to KSh 474.87 billion.
The 2025 BPS identifies the main government priorities that stem from the Bottom-Up Economic Transformation Agenda. The economy achieved a 5.6% GDP growth in 2023 after a 4.9% growth in 2022 because farmers recovered from two drought-stricken years. Economic analysts predict stable growth of 5.3% for the years 2025 and 2026.
The government has chosen six essential strategic areas for maintaining economic growth which include lowering living expenses and eliminating hunger alongside job creation expanded taxation balanced foreign exchange and inclusive economic development. The government seeks to accomplish its goals by making vital economic sector investments while improving market access for all businesses and attracting local and foreign investment.
The government focuses its fiscal policy on debt risk reduction together with the preservation of critical public services delivery. The government implements three main approaches to fiscal management that consist of optimizing public spending while actively raising income and achieving better tax enforcement. The Medium-Term Revenue Strategy will direct changes to taxation to maintain fairness together with efficiency and progressive taxation.
The government has established four main fiscal targets to expand tax base utilization while using technology to optimize taxation efficiency and close revenue leaks while optimizing non-tax revenue streams from government entities.
Better cash flow management will be achieved through government initiatives which include zero-based budgeting and accrual-based accounting and a Treasury Single Account implementation. The government remains dedicated to launching the Integrated Financial Management Information System (IFMIS) asset inventory management system along with intensifying Public-Private Partnerships (PPPs) to enhance private sector access in public service delivery.
The Cabinet provided authorization for KSh 344.8 billion in additional funds through the 2024/25 Supplementary Estimates No. II. The government allocation contains KSh 199.0 billion in recurrent costs along with KSh 145.8 billion dedicated to development projects. The budgeted funds will support external projects together with payroll expenses and budgetary shifts according to government priorities.
This decision emerges as an answer to economic challenges that resulted from mid-2024 countrywide demonstrations which caused the Finance Bill 2024 to be removed. Representatives sought to obtain KSh 344.3 billion in new revenue through the bill until public resistance forced its withdrawal.
The proposed budget remains under parliamentary review before it can be implemented through an approval process. Through its complete strategy, the government works toward building economic expansion prudent financial practices and enhanced citizen prosperity.
