Treasury Cabinet Secretary John Mbadi on Wednesday tabled his maiden Ksh 4.24 trillion budget for the 2025/26 fiscal year before the National Assembly, amid growing public calls for tax cuts and economic relief from the rising cost of living.
The expansive budget outlines the Kenya Kwanza administration’s key policy priorities, including education, infrastructure development, healthcare, food security, affordable housing, and preparations for Kenya’s hosting of the Africa Cup of Nations (AFCON) 2027. It also lays out the government’s revenue expectations and borrowing plans to bridge a projected fiscal deficit.
The budget comprises Ksh 1.79 trillion for recurrent expenditure and Ksh 707.8 billion for development. Additionally, Ksh 1.34 trillion has been earmarked for Consolidated Fund Services (CFS), with interest payments on the country’s Ksh 10.6 trillion public debt consuming Ksh 1.1 trillion of that amount.
The Treasury expects to raise Ksh 3.3 trillion through tax revenue and Appropriations-in-Aid (AIA), leaving a deficit of approximately Ksh 876 billion. To close this gap, Mbadi announced that Ksh 592 billion will be borrowed domestically, Ksh 284 billion from external sources, and Ksh 46.9 billion is expected from development partners as grants.
Below is a breakdown of the budget’s key sectoral allocations:
Education Budget: Ksh 701.1 Billion
The education sector receives the lion’s share of national government expenditure at Ksh 701.1 billion, representing 28.1% of the budget. The funds will support:
Capitation for primary, junior and senior secondary schools
Technical and Vocational Education and Training (TVET) institutions
Public universities
Remuneration of teachers, instructors, and lecturers
Infrastructure development in schools and learning institutions
Health Budget: Ksh 141.2 Billion
The health sector has been allocated Ksh 141.2 billion to strengthen universal health coverage. The allocation will fund:
Procurement of medical supplies
Construction and upgrading of health facilities
Recruitment and deployment of healthcare personnel
Rollout of community health services
Expansion of NHIF coverage
Defence Budget: Ksh 156.8 Billion
The Ministry of Defence will receive Ksh 156.8 billion to bolster national security. This funding will cater for:
Modernization of military equipment
Operations and maintenance
Personnel remuneration and welfare
Training and strategic installations
National Intelligence Service (NIS) & Social Media Monitoring: Ksh 46.3 Billion
The National Intelligence Service has been allocated Ksh 46.3 billion, part of which is expected to support enhanced digital surveillance, including monitoring of online activities for national security purposes.
Affordable Housing Fund: Ksh 95 Billion
Under the urban development budget of Ksh 119 billion, Ksh 95 billion has been allocated to the Affordable Housing Fund. This will support:
Construction of low-cost housing units
Mortgage subsidies and tenant-purchase schemes
Servicing of land and infrastructure for housing
Agriculture and Fertilizer Subsidy Programme: Ksh 54.6 Billion
To enhance food security, the agriculture sector has been allocated Ksh 54.6 billion. Highlights include:
Ksh 17.2 billion for fertilizer subsidies
Ksh 10.1 billion for irrigation projects
Ksh 9.8 billion for strategic food reserves
Ksh 6.5 billion for extension services and agro-processing
AFCON 2027 Preparations: Ksh 21.7 Billion
In preparation for hosting the 2027 Africa Cup of Nations (AFCON), Kenya has allocated Ksh 21.7 billion. The funding will go toward:
Renovation and upgrading of key stadiums including Kasarani, Nyayo, and Kipchoge Keino
Construction of new sports infrastructure to meet CAF standards
Logistics, marketing, and security operations for the tournament
Sports talent development and training camps
This investment is part of Kenya’s joint bid with Uganda and Tanzania to successfully host the continental football showcase and boost sports tourism.
Support to Devolved Units: Ksh 405.1 Billion
Counties will receive Ksh 405.1 billion as their equitable share. Additionally, Ksh 10.2 billion has been set aside for the Equalization Fund to promote equitable development in marginalized areas.
Executive, Judiciary, and Parliament Allocations
The Executive arm will receive Ksh 2.5 trillion (59% of total expenditure), Parliament has been allocated Ksh 42.5 billion, and the Judiciary Ksh 26.7 billion. The Office of the Auditor General will receive Ksh 8.68 billion.
A Balancing Act Amid Fiscal Pressures
While presenting the budget, CS Mbadi defended the spending plan as a necessary investment in the country’s socio-economic future, noting that it aligns with the Bottom-Up Economic Transformation Agenda (BETA).
“This budget reflects our continued commitment to fiscal responsibility while prioritizing key sectors such as infrastructure, health, education, and job creation,” said Mbadi.
However, economists warn that the heavy borrowing plan could worsen Kenya’s debt sustainability unless matched with aggressive revenue collection reforms and spending efficiencies.
The budget is now subject to debate and approval by Parliament before implementation on July 1, 2025.
Written By Rodney Mbua
