Treasury Cabinet Secretary John Mbadi tabled the Final Budget Policy Statement 2026 in the National Assembly on February 10, revealing major changes in how the government plans to finance its spending for the 2026/27 financial year.
The latest Policy Statement is the fourth under the Kenya Kwanza Administration and reflects the progress made under the Bottom-Up Economic Transformation Agenda (BETA).
The total size of the 2026/27 Budget has been increased to Ksh4,703.9 billion, up by Ksh62 billion from earlier projections. The increase comes from adjustments across key spending areas:
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Recurrent spending is now set at Ksh3,456.9 billion, an increase of Ksh25.7 billion.
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Development spending has been reduced to Ksh749.5 billion, down Ksh9.6 billion.
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County transfers have been raised to Ksh495.5 billion, up Ksh48.9 billion.
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Contingency Fund allocation is now Ksh2.0 billion, Ksh3 billion lower than previously projected.
Also Read: Why Kenya Plans to Borrow More at Home in 2026 Budget
Government’s Budget Plan for 2026/2027
According to the budget policy, the government had originally planned to borrow Ksh1,006.6 billion from local banks and Ksh99.5 billion from overseas in the 2026/27 budget.
In the revised plan, domestic borrowing has been lowered to Ksh890.4 billion, while external borrowing has more than doubled to Ksh225.5 billion.
These changes aim to reduce pressure on local interest rates, making credit more accessible to businesses and households.
The government has shifted from domestic borrowing to more international loans, following recent upgrades to Kenya’s credit rating that have increased investor confidence,
Kenya Kwanza’s BETA Achievements
The Bottom-Up Economic Transformation Agenda (BETA) program by the Kenya Kwanza Government continues to guide the set investment priorities, focusing on job creation, income growth, and expanded economic participation.
The government has approved the establishment of the National Infrastructure Fund and the Sovereign Wealth Fund to sustainably finance the transformation agenda.
Together, these instruments are expected to mobilize Ksh 5 trillion through domestic resources, monetization of public assets, and crowding-in of private capital, leveraging up to Ksh 10 for every shilling invested.
Also Read: Inside Treasury’s Car Loan Scheme for State Officers and Who Qualifies for Up to KSh5 Million
Privatization proceeds will be ring-fenced to support priority investments in food security, infrastructure expansion, and energy-driven industrialization.
These initiatives will be implemented alongside continued investments in
- Agriculture
- MSMEs
- Housing
- Health
- Fiscal Strategy and Reforms
Kenya’s economy has continued to show remarkable resilience, consistently outperforming regional and global averages over the past three years.
“The 2026 BPS is prepared against a backdrop of a resilient yet uncertain global economic environment. Global growth is projected at 3.3 percent in 2026, moderating slightly to 3.2 percent in 2027, reflecting elevated trade policy uncertainty, tighter financial conditions, and persistent geopolitical tensions that continue to weigh on global economic activity,” read the policy statement.
Kenya Revenue Authority will also implement reforms to broaden the tax base, improve compliance, and make tax collection fairer for both small and self-employed taxpayers.
On expenditure, the government plans to improve efficiency through measures such as:
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e-Procurement and digital management of payroll and investments
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Implementation of the Treasury Single Account and accrual accounting
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Strategic use of public-private partnerships
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Reforms of state-owned enterprises, including privatization and partnerships
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