💰Kenya’s Budget Balancing Act: A Story of Spending, Shortfalls, and Strategy

Yesterday, Treasury Cabinet Secretary John Mbadi presented his first national budget under the Kenya Kwanza administration, unveiling a bold KSh 4.3 trillion spending plan for the 2025/2026 financial year. But with only KSh 3.34 trillion in expected revenue, the numbers reveal a clear tension: ambition is outpacing affordability. The nearly KSh 900 billion gap will be bridged by debt, a choice that underscores both urgency and risk.

Let's explore the financial flows:

💰 Where the Money Comes From

Mbadi’s plan hinges on collecting KSh 2.7 trillion in taxes—about 64% of the required funds. Add KSh 560 billion from service charges (Appropriations-in-Aid) and KSh 46.9 billion in grants, and the government projects total inflows of around KSh 3.3 trillion. Still, even with every coin of ordinary revenue, ministerial allocations, and development inflows, the math doesn’t add up. To close the deficit, KSh 592 billion will be borrowed domestically and KSh 284 billion from external lenders.

🏛️ Where the Money Goes

The budget’s priorities show a familiar tilt: KSh 1.8 trillion is allocated to recurrent expenditure—wages, pensions, and operations—while another KSh 1.4 trillion goes to the Consolidated Fund Services to meet debt obligations. In contrast, development spending receives just KSh 700 billion, underlining Kenya’s continued bias toward consumption over capital growth. Counties, meanwhile, will share KSh 400 billion, a key part of devolution but arguably insufficient to spur transformative change.

⚖️ The Trade-Offs Ahead

This is a budget of choices—between discipline and debt, stability and growth. Domestic borrowing could squeeze private credit; foreign loans carry future repayment burdens. Yet, Mbadi’s tone was one of resolve: a push for tighter revenue collection, greater efficiency, and a long-term shift toward fiscal responsibility. Whether this plan delivers stability or deepens Kenya’s debt spiral will depend not just on policy—but on execution.

A budget is more than figures—it’s a national statement of intent.