The Cabinet has approved the 2025 Budget Policy Statement (BPS), establishing the total budget for the 2025/26 financial year at Ksh 4. 2 trillion.
This statement, which will be sent to Parliament for further discussion, identifies key government priorities, including economic growth, fiscal stability, and sustainable green development.
The BPS indicates that total expenditure for the financial year will account for 22. 1% of Kenya’s Gross Domestic Product (GDP).
Within the Ksh 4. 2 trillion budget, Ksh 3. 09 trillion is earmarked for recurrent expenditures, Ksh 725. 1 billion for development initiatives, Ksh 436. 7 billion for county transfers, and Ksh 5 billion for the Contingency Fund.
As per the Division of Revenue Bill 2025, the National Government has proposed a shareable revenue amounting to Ksh 2. 8 trillion.
County governments are set to receive Ksh 405. 1 billion as their equitable share, along with an additional Ksh 10. 6 billion from the Equalisation Fund.
This county allocation constitutes 25. 8% of the most recently audited revenue of Ksh 1. 57 trillion for the 2020/21 financial year, in accordance with constitutional mandates.
The County Allocation Revenue Bill 2025 will allocate these funds using the Third Basis Formula.
Furthermore, the County Government Additional Allocation Bill 2025 suggests an extra Ksh 69. 8 billion, which includes Ksh 12. 89 billion from the National Government and Ksh 56. 91 billion from development partners.
With these added resources, total county transfers for the 2025/26 fiscal year will reach Ksh 474. 87 billion.
