Kenya Unveils KSh 4.2 Trillion Budget to Drive 2025/26 Economic Growth

 

The Kenyan government has officially unveiled a historic KSh 4.2 trillion ($32.5 billion USD) budget for the 2025/2026 financial year, signaling an aggressive push toward economic recovery, job creation, and long-term development. The budget, presented by Treasury Cabinet Secretary Prof. Njuguna Ndung’u, is the largest in Kenya’s history and reflects the government’s commitment to addressing national priorities while maintaining fiscal responsibility.

Focus on Development and Infrastructure

A significant portion of the budget has been allocated to infrastructure projects aimed at boosting economic productivity. Roads, railways, energy, and water systems are among the key sectors receiving substantial funding. The government emphasized that investments in infrastructure will not only improve connectivity and logistics but also enhance the competitiveness of Kenyan businesses.

Flagship projects under the government’s Bottom-Up Economic Transformation Agenda (BETA) are central to this year’s budget. These projects focus on empowering micro, small, and medium enterprises (MSMEs), supporting agricultural value chains, and promoting inclusive growth at the grassroots level.

Healthcare and Education Get a Boost

Education and healthcare remain top priorities. The government has increased allocations to improve learning environments, hire more teachers, and support the transition to the Competency-Based Curriculum (CBC). Meanwhile, health sector funding aims to enhance access to affordable care through the Universal Health Coverage (UHC) program, with plans to upgrade health facilities and ensure consistent medical supply chains.

Revenue Generation and Fiscal Sustainability

To support this expansive budget, the government has outlined an ambitious revenue collection target of over KSh 3 trillion. The Kenya Revenue Authority (KRA) is expected to intensify tax enforcement and expand the tax base through digitization and improved compliance measures. However, the government also aims to keep the fiscal deficit within manageable levels by curbing non-essential spending and prioritizing high-impact projects.

Part of the funding will come from external borrowing, but the Treasury has assured the public that borrowing will be done cautiously and strategically, in line with Kenya’s debt sustainability framework. The fiscal deficit is projected to narrow to below 4.5% of GDP, indicating a shift toward fiscal consolidation.

Support for Youth and Job Creation

Recognizing the pressing need to tackle unemployment, especially among the youth, the budget outlines programs geared toward skills development, entrepreneurship, and digital innovation. Initiatives like the Youth Empowerment Programme and the Digital Superhighway will receive significant funding to create jobs and improve access to online markets and services.

Conclusion

The 2025/26 budget reflects Kenya’s ambition to accelerate economic recovery, promote inclusive development, and position itself as a competitive economy in the region. While challenges such as inflation, global uncertainties, and debt management remain, the government’s strategic focus on growth and resilience provides a hopeful outlook for the coming fiscal year.

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