Breakdown: Key Numbers as CS Mbadi Prepares to Present Ksh4.29 Trillion Budget Today

Hello and welcome to the Money News Roundup Newsletter, where we’re zooming in on the Ksh4.29 trillion budget that CS Mbadi is set to present in Parliament today.

Key Numbers to Note

Today at 3:00 p.m., Treasury Cabinet Secretary John Mbadi will unveil the budget for the Financial Year 2025/2026, now estimated at Ksh4.29 trillion. This is a downward revision from January’s estimate of Ksh4.5 trillion.

Breakdown:  From the total budget:

• The Executive will receive Ksh2.5 trillion
  
  
• Parliament: Ksh47.99 billion
  
  
• Judiciary: Ksh27.78 billion
  
  
• Counties: Ksh405 billion
  
  
• Debt servicing: Ksh1.09 trillion
  

Biggest Beneficiaries: According to reorganised budget estimates presented in Parliament on Wednesday by the National Assembly’s Budget and Appropriations Committee, the military saw the biggest increase, receiving an additional Ksh13 billion. Other major gains include:

• Quality assurance and standards: +Ksh5.9 billion
  
  
• Road transport: +Ksh4.96 billion
  
  
• Housing development: +Ksh2.87 billion
  
  
• Migration services: +Ksh2.31 billion
  
  
• Land policy and planning: +Ksh2 billion
  
  
• Water and sewerage services: +Ksh1.92 billion
  
  
• Policing services: +Ksh1.8 billion
  
  

Top Losers: On the other hand, several sectors faced cuts:

• Public management: -Ksh6.02 billion
  
  
• Secondary education: -Ksh4 billion
  
  
• Sports: -Ksh1.13 billion
  
  
• University education: -Ksh920 million
  
  
• Tourism: -Ksh840 million
  
  
• Primary school education: -Ksh405 million
  
  
• Governance and standards: -Ksh570 million
  
  
• General administration: -Ksh490 million
  
  

Raising Revenue: According to CS Mbadi, the government targets to collect:

• Ksh2.7 trillion through taxes
  
  
• Ksh560 billion via levies and fees
  
  
• Ksh46.9 billion through grants
  
  
• Ksh876 billion through borrowing to plug the deficit
  
  

Thorny Issue: The Budget Committee also recommended allocating Ksh150 million to the Directorate of Criminal Investigations (DCI) to procure and maintain a system capable of tracking social media users in the country.

Yes, But: Despite the slight reduction in budget estimates, experts remain skeptical about the feasibility of meeting revenue targets.

“Looking at our history in terms of collection, we have always set very ambitious revenue targets, which often lead to a growing deficit during the implementation year,” said John Kinuthia, Senior Program Officer at Bajeti Hub. “If you look at the outlined goals, the plan is to borrow more externally and reduce domestic borrowing to free up capital for businesses.”

View from Treasury: In an interview with Citizen TV on the eve of the budget unveiling, Treasury PS Chris Kiptoo said the government was sensitive to Kenyans’ concerns while drafting the budget. “This year, we came from a very difficult period. We ended last year with demonstrations over the Finance Bill, and for two or three months, economic activity slowed down. But now we’ve picked up. We decided we needed to be sensitive to what Kenyans said last year. The Finance Bill we came up with was not just about raising revenue,” he stated.

CS Mbadi also reassured the public that grants were already secured: “We don’t just wake up and assume a grant will come. These grants are negotiated. They’re just one component of the funding, and you’ll find that loans often come with a grant component,” he said.

Kenya Eyes Fresh IMF Funding Deal After Cancelling Previous Deal

Kenya is planning to negotiate a new agreement with the International Monetary Fund (IMF) when an IMF team visits in September. According to Business Daily, Central Bank Governor Kamau Thugge indicated that the government aims to use this visit — part of the IMF’s routine economic assessments — to initiate a successor program, since the previous one ended in March. Kenya has already reached out to the IMF to request a new funding arrangement, even though it fell short of meeting key goals in the last program, such as revenue targets.

In April, Kenya cancelled a 4-year engagement with IMF forgoing a year's worth of disbursement arguing that the terms were not conducive in the wake of US President Donald Trump's tarrifs and Gen Zs 2024 protest.

Nyakang’o Flags Individual Counties With Over 150 Bank Accounts Each

The Controller of Budget (CoB) Margaret Nyakang’o has flagged 10 counties for running over 100 bank accounts each, contrary to regulations that require county funds to be held at the Central Bank of Kenya. According to a report by People Daily, Baringo leads with 282 accounts—231 for health facilities—without proper approval from the National Treasury. Other counties flagged include Nairobi, Nakuru, Nyamira, Machakos, and Bomet.

Many of the accounts are used for health services, vocational training, and special projects. Bomet has 148 accounts, Elgeyo Marakwet 127, and Machakos 230. The CoB warned that these practices undermine transparency and violate the Public Finance Management Act. Counties have been urged to streamline and consolidate their bank accounts.

Kenya’s High Tax Burden Driving Workers Away from Formal Jobs

Kenya’s high tax wedge—up to 50% of gross salary—is discouraging formal employment, pushing many into the informal sector, People Daily reports. The tax wedge, which includes deductions like PAYE, NHIF, NSSF, and housing levy, now accounts for 19% of GDP, surpassing some developed countries. According to the Federation of Kenya Employers (FKE), this burden is unsustainable and reduces employee take-home pay significantly.

The World Bank warns that this tax structure creates few incentives for employers to hire formally, especially for low-wage jobs, worsening informality. It also disproportionately affects low-income earners, whose tax rates don’t rise significantly with income, unlike in more progressive systems. The bank recommends reforming the tax system to ease the burden on low-income earners and encourage more formal employment.