The Cabinet has approved the 2025 Budget Policy Statement (BPS) which allows the government to set a Ksh.4.2 trillion budget for the 2025/26 financial year.
The Cabinet, in a special meeting on Tuesday, noted that the budget includes Ksh.3.09 trillion for recurrent spending, Ksh.725.1 billion for development, Ksh.436.7 billion in county transfers and Ksh.5 billion for the Contingency Fund.
The BPS, according to Cabinet, highlights the State’s economic priorities to realise sustainable fiscal policies.
The Cabinet noted that this will be effected through six key priorities; reducing the cost of living, eradicating hunger, creating jobs, expanding the tax base, improving foreign exchange balances, and fostering inclusive growth.
“These will be achieved through strategic investments in key economic sectors, strengthening production and market access, and attracting local and foreign investments,” read the Cabinet despatch.
The budget statement also tackled the issue of balancing between reducing debt and funding critical programs by mobilising revenue and enhancing tax compliance.
This will be possible through the Medium-Term Revenue Strategy that will guide tax reforms by leveraging technology to seal revenue loopholes.
The BPS will further include a zero-based budgeting system which ensures all expenses are justified for each new financial year instead of accruing from the previous period.
The Cabinet dispatch noted that the system aims to improve cash flow and scale Public-Private Partnerships (PPPs) in public service delivery.
Further, the Cabinet approved an additional Ksh.344.8 billion in expenditures to fund critical projects.
The approval of the surplus budget seeks to offset the gap left owing to the withdrawal of the Finance Bill 2024.
