The National Treasury has projected that total revenues, including Appropriations-in-Aid, will reach Sh3.321 trillion in the 2025/26 financial year, equivalent to 17.2 per cent of GDP.

This was revealed during a session held by the Budget and Appropriations Committee on Wednesday with Treasury Principal Secretary Dr. Chris Kiptoo to review the implementation of the 2024/25 budget.

The meeting also featured a briefing from Dr. Gabriel Lagat, Head of the Intergovernmental Budget and Economic Council (IBEC), on two Senate Bills relating to county allocations.

Dr. Kiptoo reported that revenue collection by the end of June 2025 stood at Sh2.923 trillion, falling short of the target by Sh62 billion. The gap was largely due to an ordinary revenue shortfall of Sh76 billion, with most major tax categories underperforming except import duty and VAT. However, revenues from ministerial Appropriations-in-Aid surpassed expectations by Sh14 billion, mainly due to increased fees and levies charged by government ministries and agencies.

On expenditure, the government spent Sh75.1 billion less than budgeted. Development spending fell short by Sh18.9 billion, while recurrent expenditure was under by Sh46.8 billion. Transfers to counties through equitable share met the target of Sh418.3 billion, but conditional allocations to counties lagged by Sh9.4 billion.

Looking ahead, Treasury projects that ordinary revenue will reach Sh2.754 trillion in 2025/26, equivalent to 14.3 per cent of GDP. The government plans total spending of Sh4.27 trillion, or 22.2 per cent of GDP. This will include Sh3.134 trillion in recurrent expenditure, Sh651 billion for development, and Sh485 billion in transfers to counties.

In his presentation, Dr. Lagat raised concerns about the County Governments Additional Allocations Bill (Senate Bill No. 8 of 2025), noting that it fails to address Sh116.1 million in unremitted funds from 2024/25, contrary to IBEC resolutions. He also called for measures to protect county allocations from cuts during supplementary budgets, which he said undermine transfers.

“Budget rationalisation through supplementary budgets drastically cuts the National Government Budget, including conditional allocations, indirectly inhibiting transfers under this Bill,” Dr. Lagat said.

On the Equalisation Appropriation Bill (Senate Bill No. 7 of 2025), IBEC said the proposed allocation of Sh16.8 billion for 2025/26 is inconsistent with its resolutions. The Bill does not make full provision for arrears and current allocations recommended by the Commission on Revenue Allocation. IBEC has directed Treasury to disburse Sh10 billion annually from 2024/25 to clear Sh49 billion in arrears owed to the Equalisation Fund.

The Budget Committee, chaired by MP Samuel Atandi, will tomorrow conclude stakeholder consultations with the Ministry of Transport and Infrastructure. Discussions will focus on the Roads Maintenance Levy Fund, with a review of collection and disbursement trends over the last three years.