MPs Approve Sh405 Billion Allocation to Counties in Financial Year 2025/26

The National Assembly of Kenya approved an allocation of Sh405 billion to counties for the 2025/26 financial year. This allocation includes Sh69.8 billion for additional county allocations and outlines a budget ceiling of Sh2.5 trillion for the National Government. The BPS emphasizes fiscal discipline and prioritization to support economic recovery and improve public welfare.

On March 12, 2023, the National Assembly of Kenya approved an allocation of approximately Sh405 billion to county governments as part of the Budget Policy Statement (BPS) for the 2025/26 financial year. In addition, counties will receive Sh69.8 billion through the County Government Additional Allocations Bill that is aligned with the Third Schedule of the Report for FY 2025/2026.

The National Government’s budget ceiling is set at Sh2.5 trillion, with the Executive receiving Sh2.4 trillion, Parliament allocated Sh49.5 billion, and the Judiciary receiving Sh26.7 billion. Furthermore, the House approved Sh7.9 billion for the Equalization Fund and an extra Sh3.5 billion to address arrears in the fund.

Public participation initiatives will be supported with an allocation of Sh3 billion, while the Office of the Auditor General is to receive Sh8.7 billion. These allocations, once ratified by the House, will underpin the Budget Estimates for the fiscal year 2025/2026.

The 2025 BPS delineates the Government’s strategic priorities, analyzes the current economic status, offers a medium-term macro-fiscal outlook, and summarizes planned government expenditures. The aim of publishing the BPS is to enhance the public’s comprehension of Kenya’s fiscal situation and stimulate discussions regarding economic and developmental concerns.

According to the National Treasury, the policy measures in the 2025 BPS are designed to foster efficiency across the economy, create a supportive environment for business growth and investment, alleviate living costs, and promote the welfare of all Kenyans. A stringent fiscal approach aims to mitigate debt vulnerabilities through reforms targeting an expanded domestic tax base and improved tax adherence.

The BPS emphasizes that expenditure rationalization will focus on increasing public investment efficiency, better targeting of subsidies and transfers, addressing the shortcomings in state corporations, and improving the digital delivery of public services. The document also highlights the necessity of strengthening social safety nets and the fiscal risk management framework.

Given the pressing fiscal constraints, resource allocation prioritization is imperative to eliminate or postpone low-priority expenses, thereby facilitating high-priority service delivery programs. Ministries, Departments, and Agencies (MDAs) are urged to reassess all planned and existing activities, projects, and programs for the FY 2025/26 and the medium-term budget, with Sector Working Groups (SWGs) tasked to eliminate inefficient expenditures and pursue priorities that enhance livelihoods, generate employment, revive businesses, and foster economic recovery.

In summary, the National Assembly has approved significant financial allocations for the 2025/26 financial year, emphasizing enhanced efficiency in public investments and strict prioritization in budgeting. The BPS aims to address economic challenges and improve the well-being of citizens through strategic policy measures. By reinforcing fiscal discipline and reallocating resources towards high-priority initiatives, the government seeks to foster a robust economic recovery.

Original Source: www.capitalfm.co.ke