The National Treasury has defended its ambitious Sh4.785 trillion budget for the 2026/27 financial year amid mounting pressure from lawmakers demanding tougher revenue reforms, greater accountability and clearer spending priorities in a tightening fiscal environment.
Appearing before the National Assembly’s Budget and Appropriations Committee on Thursday, Treasury Cabinet Secretary John Mbadi sought to reassure MPs that the government’s fiscal framework remains sustainable despite a widening deficit and concerns over underperforming revenue collection.
The budget projects total expenditure of Sh4.785 trillion against expected revenue of Sh3.629 trillion, leaving a fiscal deficit of Sh1.111 trillion — equivalent to 5.3 percent of GDP.
The session quickly evolved into a broader interrogation of the government’s economic strategy, with MPs questioning whether Treasury projections reflect Kenya’s current fiscal realities.
Committee members raised concerns over declining revenue performance, county own-source revenue leakages, health financing gaps, pending bills and the sustainability of education funding.
Rarieda MP David Ochieng questioned how the Treasury intends to strengthen county revenue collection, warning that weak systems continue to deny the government billions in potential income.
“What measures are you putting in place to factor in own-source revenue from counties because we are losing a lot of money?” Ochieng asked.
In response, Treasury officials pointed to ongoing reforms under the National Tax Policy and Medium-Term Revenue Strategy, including digitisation of tax administration through the Kenya Revenue Authority and expansion of non-tax revenue collection across ministries and state agencies.
Mbadi said the government is banking on reforms such as land rent restructuring, instant fines and enhanced KRA enforcement systems to improve collections without introducing excessive tax burdens.
The hearing also exposed growing concern over the financing and accountability of the Social Health Authority (SHA), now one of the government’s flagship reforms under the Bottom-Up Economic Transformation Agenda (BETA).
Committee Chairperson Samuel Atandi and Tongaren MP John Chikati demanded clarity on how the scheme is functioning despite over 27 million Kenyans reportedly registered.
“Out of the 27 million enrolled, who is paying premiums? We need to know who has benefited,” Chikati said.
Treasury acknowledged that while enrolment has surpassed 27 million, only about five million Kenyans are active contributors, including four million salaried workers and approximately one million voluntary contributors.
Mbadi admitted the Treasury did not have complete beneficiary data at hand, saying detailed records are held by the SHA Board and the Ministry of Health.
“We may not have all the figures here, but the SHA Board can provide them. We need to allocate more resources to primary healthcare,” he told the committee.
Even as lawmakers pressed for answers, the Treasury defended the budget as a growth-oriented plan designed to shield the economy from global shocks while sustaining key development programmes.
Mbadi said the government remains focused on BETA’s five pillars — agriculture, MSMEs, affordable housing, digital economy and healthcare — while pursuing what he termed “growth-supportive fiscal consolidation.”
The Treasury highlighted several flagship programmes, including the construction of more than 214,000 affordable housing units, expansion of fibre optic infrastructure to over 80,000 kilometres and training of more than 1.5 million youth under the Ajira programme.
Officials also cited the digitisation of land records through Ardhi Sasa and fertiliser subsidy programmes as key interventions expected to support economic growth.
However, MPs remained concerned about implementation gaps and financial discipline.
Samburu West MP Naisula Lesuuda questioned whether education capitation should be treated as a first charge on the Exchequer to avoid chronic funding delays, while Nyamira MP Japheth Nyakundi sought explanations on the effectiveness of the Electronic Government Procurement system.
Mbadi acknowledged historical delays in exchequer releases but said the Treasury had made significant progress in clearing pending bills and ensuring timely disbursements to counties and state agencies.
“We have been working over the past two financial years to ensure disbursements are up to date. Payments to counties, NG-CDF and NGAAF are almost current,” he said.
The Treasury further defended its reliance on Public-Private Partnerships (PPPs), citing projects such as the Nairobi Expressway expansion, Menengai geothermal development and the Galana Kulalu food security project as examples of how government intends to reduce pressure on public borrowing.
Kenya’s economy is projected to grow by 5.0 percent in 2026 despite global economic uncertainty, rising oil prices and geopolitical tensions.
“We remain committed to ensuring resources reach priority sectors that directly impact citizens,” Mbadi told lawmakers.
The Budget and Appropriations Committee is expected to table its report on the budget estimates before the National Assembly next week, setting the stage for intense parliamentary debate over the country’s fiscal direction.
