NAIROBI – Kenya is setting its sights on a tighter budget next year, aiming to shrink its fiscal deficit to 4.5 percent of GDP a notable drop from this year’s 5.1 percent.
The plan, announced by the National Treasury, signals a shift towards stricter public spending and deeper reforms to rein in mounting debt.
At a Cabinet meeting chaired by President William Ruto in April, ministers backed a series of cost-cutting proposals meant to bring discipline to government finances. Officials say the goal is not just to close the deficit, but to reshape how public money is managed.
“We’re moving towards fiscal consolidation while protecting essential services,” a senior Treasury official said, speaking on condition of anonymity as they were not authorised to go on record.
Among the planned measures: the dissolution of at least 47 state corporations with overlapping functions, a move that would see their responsibilities folded into existing ministries. The government is also looking to halve the number of official advisers, and cut spending linked to high-profile executive offices, including those of the First Lady, the Deputy President’s spouse, and the Prime Cabinet Secretary’s spouse.
Confidential budgets in top offices will be scrapped. At the same time, the government intends to refinance part of its external debt through cheaper, concessional loans and climate-friendly financing instruments.
The long-term plan is more ambitious still. The Treasury hopes to reduce the deficit to 2.7 percent of GDP by the 2028/29 financial year.
Kenya’s fiscal strain is no secret. High debt repayments and sluggish tax collection have left little room for investment in services. According to the Parliamentary Budget Office, nearly half of all government revenue now goes to servicing debt.
To help reset the books, President Ruto has ordered all ministries and departments to review their expenditures and cut non-essential costs in coordination with the Treasury.
“Our priority is to channel resources into areas that directly impact citizens health, education, infrastructure,” said Treasury Principal Secretary Chris Kiptoo in a recent media briefing.
But not everyone is convinced the cuts will be enough. Critics argue that unless revenue collection improves and loopholes are plugged, the burden of adjustment could fall on ordinary Kenyans through reduced services or delayed projects.
Still, fiscal experts say the government’s renewed focus on debt and spending signals a welcome shift.
“There’s been a realisation that the country cannot keep borrowing at the same pace,” said economist Kwame Owino, CEO of the Institute of Economic Affairs.
“But cuts alone won’t do the job. Efficiency, transparency, and real political will are essential.”
As the 2025/26 budget heads to Parliament next month, all eyes will be on whether the proposed savings are real and whether they will hold.
