The
National Assembly's Budget and Appropriations Committee has tabled its report
on the 2025-26 budget estimates, proposing modifications to the National
Treasury's submissions. The committee recommends a 2.75 per cent increase over
Treasury's proposals, bringing the total budget to Sh4.356 trillion. While
parliamentary review and adjustment of executive budget proposals are standard
practice, the specific nature and scale of these modifications raise important
questions about fiscal policy coherence and resource prioritisation in Kenya's
current economic context.
These modifications to Treasury's proposals might seem contradictory to concurrent budget cuts and fiscal consolidation efforts that have characterised Kenya's recent fiscal policy discourse. The substantial increase in legislative allocations over Treasury's recommendations occurs against a backdrop of revenue collection challenges and delayed external financing, raising questions about the alignment between stated fiscal objectives and parliamentary budget priorities.
The
proposed budget modifications reveal notable disparities in how the committee
has adjusted Treasury's sectoral allocations. Most significantly, Parliament's
budget receives a 12.95 per cent increase over Treasury's proposal, bringing its
allocation to Sh47.99 billion. This represents the largest proportional
adjustment among all government arms. The committee proposes more modest
increases to Treasury's submissions for the Executive (4.53 per cent to Sh2.538
trillion) and Judiciary (4.19 per cent to Sh27.779 billion). Development spending
receives a substantial 12.05 per cent increase over the Treasury's proposal to Sh721.52 billion.
The pattern of adjustments suggests parliamentary prioritisation that differs markedly from the Treasury's original fiscal framework. While parliamentary oversight of executive budget proposals serves an important constitutional function, the scale of self-allocation raises questions about the separation between legislative oversight and institutional self-interest.
The committee's revenue projections merit careful examination given recent collection performance. In the first 10 months of 2024-25, total revenue collection fell short of targets by Sh253 billion, achieving an 89.91 per cent performance rate. Ordinary revenue missed targets by Sh195.3 billion, while Appropriations in Aid underperformed by Sh57.7 billion.
Despite this consistent underperformance, the committee proposes only a modest 0.35 per cent upward revision to revenue targets, bringing them to Sh3.328 trillion. This incremental adjustment appears optimistic, considering the structural revenue challenges evidenced by the persistent collection gaps. The committee's recommendation for reassessing the AIA framework acknowledges these systemic issues but may require more comprehensive reform than currently envisioned.
The fiscal landscape is further complicated by external financing delays. The World Bank has postponed a Sh96 billion loan facility, while the ninth IMF review remains incomplete, effectively freezing $765 million (Sh98.9 billion) in budgetary support. These delays represent approximately Sh200 billion in anticipated external financing that remains uncertain.
The timing of these financing delays coinciding with parliamentary increases over Treasury's proposals presents a policy coordination challenge. International financial institutions typically condition support on fiscal discipline and governance improvements. The committee's allocation adjustments, particularly the substantial parliamentary budget expansion beyond Treasury's recommendations, may not align with the fiscal consolidation narrative that external partners expect to observe.
From a public expenditure management perspective, the allocation pattern raises questions about opportunity costs and developmental impact. The 12.95 per cent increase in parliamentary allocations could fund significant infrastructure projects, educational improvements or the healthcare system. The committee's identification of excessive office rent expenditure as a concern suggests potential efficiency gains that could be redirected toward higher-impact investments.
Development spending receives a meaningful increase, but the absolute amounts favour institutional operations over capital formation. This balance may not optimise long-term economic growth potential, particularly given Kenya's infrastructure and human capital development needs.
The proposed budget adjustments present several policy coherence challenges, as the increase in expenditure commitments while revenue collection consistently underperforms established targets creates potential fiscal sustainability risks. Additionally, the political economy of significant parliamentary budget increases during economic hardship periods may undermine public confidence in fiscal management.
Several policy adjustments could enhance fiscal coherence and developmental impact: Budget projections should incorporate more conservative revenue assumptions based on demonstrated collection capacity rather than aspirational targets. Secondly, Public expenditure decisions should include clear justifications and expected outcomes to maintain public confidence in fiscal management.
The National Assembly's budget proposals reflect the complex balancing act between institutional needs, developmental priorities and fiscal constraints. However, the specific allocation patterns and their timing raise important questions about policy coherence and strategic prioritisation.
Effective fiscal policy requires alignment between revenue realities, expenditure priorities and external commitments. The current proposals present opportunities for refinement to better serve Kenya's long-term developmental objectives while maintaining fiscal credibility with both domestic stakeholders and international partners.
The budget process provides an opportunity to demonstrate fiscal discipline while prioritising investments that drive sustainable economic growth. Achieving this balance requires careful consideration of both immediate institutional needs and broader developmental impacts in the context of Kenya's evolving fiscal landscape.
The writer works at a PFM-focused think tank
