The Kenyan government has approved additional spending of KSh199 billion in the second supplementary budget, a nearly threefold increase from the KSh67 billion that the Draft Budget Policy Statement for 2025 had proposed.
This is significant, though lower than previously reported, and still exceeds the projected revenue shortfall following the withdrawal of the Finance Bill 2024.
From the proposed 2024/25 Supplementary Estimates No. II, KSh199 billion has been allocated, comprising KSh199 billion for recurrent spending and KSh145.8 billion for development.
“The approval comes amid economic disruptions, including civil protests in June, July, and August 2024, which led to the withdrawal of the Finance Bill 2024. The bill had initially proposed raising Sh344.3 billion in additional revenues but faced strong public opposition,” read the dispatch from State House.
However, the government has not announced how it will finance this increased spending, considering the additional revenue via Tax Laws (Amendment) 2024 only targets KSh174.6 billion—less than the approved spending increase.
The Cabinet also confirmed that the 2025/26 national budget has been set at KSh4.2 trillion. This marks a reduction of approximately KSh153 billion from earlier projections in the Draft BPS.
“The total expenditure, equivalent to 22.1 per cent of GDP, includes KSh3.09 trillion for recurrent spending, KSh725.1 billion for development, KSh436.7 billion in county transfers, and KSh5 billion for the Contingency Fund,” the cabinet memo says.
Under the Division of Revenue Bill 2025, the National Government proposes a shareable revenue of KSh2.8 trillion, with KSh405.1 billion allocated to county governments as an equitable share and KSh10.6 billion for the Equalisation Fund.
“The county allocation represents 25.8 per cent of the most recent audited revenue (KSh1.57 trillion from the 2020/21 financial year), aligning with constitutional requirements,” the report says.
The County Allocation Revenue Bill 2025 will distribute the county share based on the Third Basis Formula, while the County Governments
Additional Allocation Bill 2025 proposes an extra KSh69.8 billion—KSh12.89 billion from the National Government and KSh56.91 billion from development partners. With these additional funds, total county transfers for 2025/26 will amount to KSh474.87 billion.
| Item | Category | Amount (KSh Billion) | Source |
|
Supplementary Budget 2024/25
|
|||
| Recurrent Spending | Supplementary | 199 | Supplementary Estimates No. II |
| Development Spending | Supplementary | 145.8 | Supplementary Estimates No. II |
|
Total Supplementary
|
344.8 | ||
|
National Budget 2025/26
|
|||
| Recurrent Spending | National | 3,090.00 | Cabinet Memo |
| Development Spending | National | 725.1 | Cabinet Memo |
| County Transfers | National | 436.7 | Cabinet Memo |
| Contingency Fund | National | 5 | Cabinet Memo |
| Total National | 4,256.80 | ||
|
County Allocations 2025/26
|
|||
| Equitable Share | Counties | 405.1 | Division of Revenue Bill 2025 |
| Equalisation Fund | Counties | 10.6 | Division of Revenue Bill 2025 |
| Additional Allocation (National) | Counties | 12.89 | County Governments Additional Allocation Bill 2025 |
| Additional Allocation (Dev. Partners) | Counties | 56.91 | County Governments Additional Allocation Bill 2025 |
| Total County | 485.5 | ||
Fiscal Deficit
“This will be achieved through expenditure rationalization, revenue mobilization, and enhanced tax compliance. The Medium-Term Revenue Strategy will guide tax reforms, ensuring efficiency, fairness, and progressivity while balancing revenue generation with social protection.”
“The government will also fully operationalise IFMIS asset inventory management modules and scale up public-private partnerships (PPPs) to enhance private sector involvement in public service delivery,” it says.