The National Treasury plans to cap the fiscal deficit at 4.5pc of gross domestic product for the 2025/26 fiscal year, down from 5.1pc in the current year.
The move is part of the government’s broader strategy to streamline public spending and address the country’s fiscal challenges. In the long-term, Kenya plans to reduce the fiscal deficit to 2.7pc of GDP by the financial year 2028/2029.
Revenue shortfalls and high debt servicing costs continue to impede Kenya’s fiscal progress highlighting the need to achieve sustainable public finances and macroeconomic stability.
A Cabinet meeting chaired by President William Ruto earlier in April approved budgetary realignments in what it termed as a move towards fiscal discipline and reducing public debt.
To actualize this, President Ruto directed ministries and State departments to review their expenditures and implement necessary adjustments in close coordination with the National Treasury.
To allow the government focus on development priorities, the government is introducing long-term cost-cutting measures including.
Dissolving at least 47 state corporations with overlapping functions and integrating their roles into respective ministries, reducing the number of government advisers by at least 50pc, eliminating budgets for the Offices of the First Lady, Spouse of the Deputy President and the Spouse of the Prime Cabinet Secretary, removing confidential budgets in executive offices and refinancing international debt with concessional and green financing options.
By implementing these strategies, the government aims to achieve a more sustainable fiscal position, reduce public debt vulnerabilities, and create fiscal space to deliver essential public goods and services.
