Cabinet approves Ksh.4.7 trillion budget for 2026/27 financial year

In a Cabinet dispatch on Tuesday, the government set a revenue target of Ksh.3.53 trillion against total expenditure of Ksh.4.7 trillion, signalling a continued budget deficit that will require borrowing and other financing measures.

Of the total expenditure, Ksh.3.46 trillion has been allocated to recurrent spending, while Ksh.749.5 billion will go toward development projects.

Transfers to county governments will amount to Ksh.495.7 billion, with Ksh.2 billion set aside for the Contingency Fund.

Under the Division of Revenue Bill, 2026, county governments are set to receive Ksh.420 billion as an equitable share, representing 21.9 per cent of the most recent audited revenue in line with constitutional requirements. An additional Ksh.15.2 billion has been allocated to the Equalisation Fund. 

Further, Ksh.75.7 billion is proposed under the County Governments Additional Allocation Bill, 2026, bringing the total transfers to counties to Ksh.495.7 billion.

"The macroeconomic outlook remains positive, with GDP growth projected at 5 per cent in 2025 and 5.3 per cent in 2026, supported by favourable weather, improved agricultural productivity, climate-smart investments, and continued implementation of the Bottom-Up Economic Transformation Agenda," the statement read in part. 

The Cabinet viewed the 2026 Budget Policy Statement as a transition from scaled-up investments to drive economic growth. 

Priority spending will target education, health, energy, infrastructure, agriculture, social protection, and national security.

The government will also push reforms in public finance management, digitisation, State-owned enterprises, and public-private partnerships.

The Budget Policy Statement, the fourth under the Kenya Kwanza Administration, will now be submitted to Parliament to guide the government’s fiscal strategy for the 2026/27 financial year.