State spending surges Sh155 billion despite promises of austerity

For months, President William Ruto's administration has urged Kenyans to tighten their belts.

National Treasury Cabinet Secretary John Mbadi has repeatedly defended what he describes as painful but necessary budget cuts.

The CS has over time insisted that the government is committed to living within its means as it seeks to contain debt and restore fiscal stability.

While presenting the 2026-27 Budget in the National Assembly on Thursday, Mbadi reaffirmed the administration's commitment to austerity.

"The government will continue implementing fiscal consolidation measures anchored on enhanced domestic revenue mobilisation, strict expenditure controls and improved efficiency in public spending," he said.

But a new report by Controller of Budget Margaret Nyakang'o suggests the government's spending patterns tell a different story.

The National Government Budget Implementation Review Report for the first nine months of the 2025-26 financial year reveals significant increases in expenditure on foreign travel, hospitality, insurance and other operational costs despite repeated pledges to curb non-essential spending.

When President Ruto assumed office in 2022, and later in 2024 after Gen Z protests, he promised to slash wasteful expenditure across government

The National Treasury later reinforced the policy, targeting travel, hospitality and other discretionary spending that officials argued could be reduced through virtual meetings and tighter controls.

Yet the latest figures show recurrent expenditure by ministries, departments and agencies continued to rise.

Between July last year and March, recurrent spending reached Sh1.36 trillion, up from Sh1.20 trillion during the same period in the previous financial year.

The increase represents an additional Sh155.73 billion spent on day-to-day government operations.

Compensation of employees – that is salaries and allowances, accounted for the largest share of the increase, rising by Sh47 billion.

Utility costs increased by about Sh500 million, while expenditure on foreign travel climbed by Sh1.4 billion to Sh6.5 billion.

Foreign travel has been one of the expenditure items the government has repeatedly promised to contain as part of its austerity programme.

The latest spending represents a 27 per cent increase from the Sh5.1 billion spent during the corresponding period of the 2024-25 financial year.

Although domestic travel recorded a slight decline, it still consumed Sh10.9 billion compared to Sh11.6 billion spent during the same period last year.

Government spending on rent also continued to rise despite ongoing efforts to rationalise office space and reduce administrative costs.

The report shows expenditure on rent increased by about Sh500 million to Sh6.7 billion.

Hospitality expenditure also posted one of the sharpest increases in the period under review.

Spending under the category, which includes catering services, receptions, conferences and entertainment, rose by Sh1.3 billion to Sh4.9 billion from Sh3.6 billion in the previous year.

The 34 per cent increase is likely to raise questions about the effectiveness of expenditure controls that have been repeatedly announced by the Treasury.

Insurance expenditure registered an even more dramatic jump, moving up almost three times last year’s spend.

According to the report, spending on insurance rose from Sh8.4 billion in the first nine months of the 2024-25 financial year to Sh23.3 billion during the review period.

Nyakang'o's report does not explain the sharp increase, leaving unanswered questions about whether the rise was driven by changes in asset valuation, expanded coverage or procurement decisions.

Another category that expanded significantly was "other operating expenses", an expenditure vote often associated with discretionary government operations.

Spending under the category rose from Sh50.8 billion last year to Sh61.3 billion this year, an increase of about Sh10 billion.

Security agencies accounted for a substantial share of the additional expenditure, even as transfers to state corporations and subsidies declined by about Sh6 billion.

The report also points to growing reliance on emergency spending authorised under Article 223.

The provision allows the government to withdraw money from the Consolidated Fund before parliamentary approval when expenditure is urgent and unforeseen.

However, Nyakang'o says that a significant share of the expenditure authorised under the provision was directed towards operational costs, including other operating expenses.

The trend raises concerns that emergency funding mechanisms are increasingly being used to support routine government operations rather than genuine emergencies.

As per the report’s findings, the scale of such spending has risen sharply over the past year.

The report shows that the CoB authorised Sh42.22 billion in Article 223 withdrawals during the 2024-25 financial year.

In the current financial year, the amount ballooned nearly fivefold to Sh206.81 billion.

Among the expenditures financed through the emergency provision was Sh3.9 billion allocated to the State Department for Sports for Africa Cup of Nations-related subscriptions and commitments.

Nyakang'o questioned whether all expenditures charged under Article 223 met the constitutional threshold of being unforeseen and urgent.

"The Controller of Budget recommends that requisitions under Article 223 of the Constitution should be applied strictly in line with the requirements on use of Article 223, which are unforeseen and of an emergent nature," the report states.

Meanwhile, the government's wage bill continued to grow despite ongoing efforts to contain recurrent expenditure.

The report indicates that compensation to employees reached Sh516.97 billion during the first nine months of the financial year.

Although the expenditure remained within the statutory ceiling of 35 per cent of ordinary revenue, it represented a Sh47 billion increase compared to the previous year.

The review also found that several independent commissions, including the Judicial Service Commission, the National Land Commission and the Kenya National Commission on Human Rights, utilised less than 60 per cent of their allocated budgets.

Nyakang'o attributed some of the underperformance to vacant positions and implementation delays, highlighting weaknesses in budget planning and execution.

For the CoB, the findings underscore the need for stricter discipline if the government's fiscal consolidation agenda is to be taken seriously.

"Sustained fiscal consolidation, prudent debt management, enhanced cash management and stronger oversight of borrowing and the use of public funds will be critical to strengthening fiscal resilience and supporting sustainable economic growth," Nyakang'o said.