The government has unveiled a Ksh 4.7 trillion spending plan for the 2026/27 financial year after receiving Cabinet approval, pushing total expenditure Ksh 100 billion above the current budget.
In a statement released after a Cabinet meeting on Tuesday, the Treasury projected revenues of Ksh 3.53 trillion, falling short of the proposed spending envelope and confirming that the government will continue to rely on borrowing and alternative financing to bridge the deficit. Recurrent expenditure has been allocated Ksh 3.46 trillion, underscoring the cost of running government, while Ksh 749.5 billion has been earmarked for development programmes across key sectors of the economy.
County governments are expected to receive Ksh 495.7 billion in total transfers. This includes Ksh 420 billion as an equitable share under the Division of Revenue Bill, 2026, accounting for 21.9 per cent of the latest audited national revenue. An additional Ksh 15.2 billion will go to the Equalisation Fund, with a further Ksh 75.7 billion proposed through the County Governments Additional Allocation Bill, 2026. The Contingency Fund will receive Ksh 2 billion.
The Cabinet maintained an upbeat economic outlook, forecasting GDP growth of 5 per cent in 2025 and 5.3 per cent in 2026. Growth is expected to be supported by favourable climatic conditions, higher agricultural productivity, climate-smart investments, and the ongoing implementation of the Bottom-Up Economic Transformation Agenda. The 2026 Budget Policy Statement was described as marking a transition from aggressive investment-led spending towards consolidating gains to sustain economic growth.
Priority funding areas include education, health, agriculture, energy, infrastructure, social protection, and national security. The government also plans to deepen reforms in public finance management, digital service delivery, State-owned enterprises, and public-private partnerships. The Budget Policy Statement, the fourth to be developed under the Kenya Kwanza Administration, will now be forwarded to Parliament to shape the government’s fiscal direction for the 2026/27 financial year.
