By Michelle Ndaga
The National Treasury has revised Kenya’s tax revenue target downward by Sh178 billion, acknowledging that earlier projections were too ambitious amid slower economic growth and revenue underperformance.
The adjustment, captured in the 2025 Budget Policy Statement, reflects a more realistic approach after the Kenya Revenue Authority (KRA) struggled to meet its initial targets.
Treasury officials cited weak consumer spending, subdued corporate earnings, and a challenging business environment as key reasons for the shortfall.
The new projections mean ordinary revenue for the next financial year will stand at approximately Sh2.84 trillion, down from the earlier target of Sh3.02 trillion.
This shortfall is expected to put additional pressure on the government’s fiscal plans, potentially resulting in increased borrowing or reprioritization of development projects.
Economic analysts warn that repeated revenue target misses could undermine investor confidence and complicate Kenya’s commitments to maintain a sustainable fiscal deficit.
The government is under pressure to balance the need for revenue mobilization with public pushback against new tax measures.
Treasury has reaffirmed its commitment to fiscal discipline, promising to strengthen compliance and expand the tax base while protecting growth.
source Business Daily Africa
