Cabinet Resolves to Review Ksh4.3 Trillion Budget: What It Means for Taxpayers

President William Ruto's Cabinet has resolved to review the proposed Ksh4.3 trillion budget for the 2025/2026 financial year.

As detailed in a Cabinet dispatch dated Tuesday, April 29, the Cabinet hinted that the budget would be reviewed downwards as the government aims to reduce the budget deficit.

Consequently, Cabinet Secretaries were directed to review the individual budgets of the ministries and take austerity measures.

"Cabinet Secretaries were directed to work closely with the National Treasury to identify and implement necessary adjustments within their respective ministries and State departments," read the dispatch in part.

"This move aims to cap the fiscal deficit at no more than 4.5% of GDP for the 2025/26 financial year, down from 5.3% in 2023/24, 5.1% in 2024/25, and with a medium-term target of reducing the deficit to 2.7%.”

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What it Means for Taxpayers

With the reduction in the budget deficit, the government will borrow less to fund the budget, further easing the debt burden faced by the taxpayers.

Currently, Kenya owes its creditors in the local and international markets Ksh11 trillion.

"As a result, the initial budget estimates of Ksh4.3 trillion will undergo substantial revisions before being tabled in Parliament."

"These adjustments are part of broader austerity measures designed to strengthen fiscal discipline, reduce public debt vulnerabilities, and create the fiscal space necessary to deliver essential public goods and services," read the statement in part.

Additionally, the Cabinet approved the Finance Bill 2025, which will propose new tax measures and reliefs for the next financial year.

Among the reliefs already highlighted are the tax exemption of the gratuity payments for both public and private pension schemes.

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Proposed Privileges for Judges

Further, the Cabinet also approved the Judges Retirement Benefits Bill, 2025, which will establish a dedicated pension and retirement benefits framework for judges of the superior courts.

Among the privileges they will be entitled to include medical coverage and diplomatic privileges.

"It introduces a Defined Benefit system for serving judges and a Defined Contribution system for new appointees, ensuring financial security, protecting judicial independence, and aligning with broader public sector pension reforms," read the dispatch in part.

"The new law provides for enhanced retirement benefits, including monthly pensions, gratuities, medical coverage, and diplomatic privileges for retired judges and their spouses, allowing them to retire with dignity after decades of service under strict ethical standards."