The Cabinet has approved Supplementary Budget II for the 2024/25 financial year, greenlighting an additional Kes 344.8 billion in government spending. The funds will be distributed with Kes 199.0 billion allocated for recurrent expenditures and Kes 145.8 billion for development projects.
The approval has raised eyebrows, particularly because the Draft Budget Policy Statement (BPS) 2025 had initially projected a spending increase of only Kes 67.769 billion. The sharp rise has fueled speculation about the underlying fiscal strategy, with questions emerging on whether the additional spending is aimed at plugging the Kes 344.3 billion revenue shortfall from the Finance Bill 2024.
Further concerns arise from the revenue side, as the Tax Laws (Amendment) 2024 is expected to generate only Kes 174.6 billion in additional revenue—far less than the newly approved spending increase. This raises questions about the potential impact on the fiscal deficit.
Meanwhile, the Cabinet also confirmed that the 2025/26 national budget has been set at Kes 4.2 trillion. This marks a reduction of approximately Kes 153.0 billion from earlier projections in the Draft BPS.
In terms of county funding, the Equitable Share for the 2025/26 financial year has been retained at Kes 405.1 billion, representing a 6.61% year-on-year increase from 2024/25.
Notably, the Cabinet’s official dispatch highlighted GDP growth figures of 4.9% in 2022, 5.6% in 2023, and a projected 5.3% in 2025. However, it made no mention of the 2024 growth outlook—a silence that could be telling, especially in light of the recent downward revision of 2024 growth projections to 4.6%. This downgrade suggests that economic performance this year may even fall below the 2022 level.
With rising concerns over fiscal sustainability, all eyes are now on how the government plans to balance its increased spending with revenue mobilization efforts in the months ahead.
