Breakdown of the approved 2025 Budget Policy Statement

By Peter Ochieng

President William Ruto on Tuesday, February 11, 2025, at State House, Nairobi, chaired a special cabinet meeting.

During the meeting, the cabinet approved the 2025 Budget Policy Statement (BPS), with the statement which will be forwarded to Parliament setting Sh4.2 trillion budget for the 2025/26 financial year.

Kenya’s 2023/2024 budget was capped at Sh3.7 trillion, while retired President Uhuru Kenyatta’s budget before retiring in 2022 was Sh3.3 trillion.

According to the 2025/2026 BPS, if approved, Sh3.09 trillion will go into recurrent spending, Sh725.1 billion for development, Sh436.7 billion in county transfers, and Sh5 billion for the Contingency Fund – a reserve of money set aside to cover possible unforeseen future expenses.

“Under the Division of Revenue Bill 2025, the national government proposes a shareable revenue of Sh2.8 trillion, with Sh405.1 billion allocated to county governments as an equitable share and Sh10.6 billion for the Equalisation Fund,” BSP reads in part.

“The county allocation represents 25.8% of the most recent audited revenue (Sh1.57 trillion from the 2020/21 financial year), aligning with constitutional requirements. The County Allocation Revenue Bill 2025 will distribute the county share based on the Third Basis Formula, while the County Governments Additional Allocation Bill 2025 proposes an extra Sh69.8 billion - 12.89 billion from the national government and Sh56.91 billion from development partners. With these additional funds, total county transfers for 2025/26 will amount to Sh474.87 billion,” it adds.

Further, the 2025 BPS outlines the government’s economic priorities, focusing on sustaining growth, ensuring fiscal stability, and promoting inclusive green development.

President William Ruto’s Kenya Kwanza administration has outlined six priorities, aimed at maintaining economic momentum. They are: reducing the cost of living, eradicating hunger, creating jobs, expanding the tax base, improving foreign exchange balances, and fostering inclusive growth.

As such, the Medium-Term Revenue Strategy will guide tax reforms, ensuring efficiency, fairness, and progressivity while balancing revenue generation with social protection.

Additionally, the cabinet approved the proposed 2024/25 Supplementary estimates No. II, in the process authorizing an additional Sh344.8 billion in expenditures, with Sh199.0 billion allocated for recurrent spending and Sh145.8 billion for development.

The cabinet also endorsed a comprehensive plan to enhance passenger experience at Jomo Kenyatta International Airport (JKIA) in Nairobi, by streamlining operations and bolstering security.

JKIA infrastructure will also undergo major upgrades, including modernised baggage handling systems, improved stormwater drainage and access roads, installation of covered walkways, enhanced air conditioning, and clearer signage.

“These measures take immediate effect, reinforcing JKIA’s position as a leading aviation hub by improving efficiency, security, and overall passenger experience,” reads a dispatch from State House.

In conclusion, the cabinet endorsed Kenya’s hosting of the International Air Transport Association (IATA), underscoring the country’s commitment to enhancing international cooperation and economic diplomacy.