The Cabinet has endorsed the Sh4.7 trillion Budget for the 2026/27 financial year, setting out the Government’s fiscal priorities as it signals a shift from stabilisation to scaled-up investment aimed at accelerating economic growth.
According to details approved by Cabinet on Tuesday, the Budget projects total revenues of Sh3.53 trillion against total expenditure of Sh4.7 trillion, reflecting a continued financing gap as the State seeks to balance development needs with fiscal discipline.
Of the total expenditure, Sh3.46 trillion is allocated to recurrent spending, while Sh749.5 billion is earmarked for development projects. Transfers to county governments amount to Sh495.7 billion, alongside Sh2 billion set aside for the Contingency Fund.
Under the proposed Division of Revenue Bill, 2026, county governments are set to receive Sh420 billion as their equitable share, representing 21.9 per cent of the most recent audited revenue, in line with constitutional requirements.
An additional Sh15.2 billion is proposed for the Equalisation Fund to support marginalised areas.
Further allocations of Sh75.7 billion are planned through the County Governments Additional Allocation Bill, 2026, bringing total transfers to counties to Sh495.7 billion.
“Under the Division of Revenue Bill, 2026, county governments will receive Sh420 billion as an equitable share, representing 21.9 per cent of the most recent audited revenue in line with constitutional requirements,” the Cabinet noted, underscoring the centrality of devolution financing in the new fiscal plan.
The Budget is anchored in a positive macroeconomic outlook, with the economy projected to grow by 5 per cent in 2025 and 5.3 per cent in 2026.
The growth outlook is supported by favourable weather conditions, improved agricultural productivity, climate-smart investments, and continued implementation of the Bottom-Up Economic Transformation Agenda (BETA).
The fiscal framework is guided by the 2026 Budget Policy Statement (BPS), themed “Accelerating Gains under the Bottom-Up Economic Transformation Agenda for Inclusive and Sustainable Growth.”
The statement marks a strategic transition from a period of fiscal stabilisation to increased investment designed to unlock the next phase of economic expansion.
“The 2026 Budget Policy Statement marks a transition from fiscal stabilisation to scaled-up investment to drive the next phase of economic growth,” the Cabinet said, highlighting a renewed focus on growth-enhancing expenditure.
Priority investments outlined in the BPS target key sectors, including education, health, energy, infrastructure, agriculture, social protection, and national security.
In addition to sectoral spending, the Government plans to advance reforms in public finance management, digitisation of services, restructuring of State-owned enterprises, and the expansion of public-private partnerships to improve efficiency and service delivery.
“The macroeconomic outlook remains positive, with GDP growth projected at 5 per cent in 2025 and 5.3 per cent in 2026,” Cabinet stated, pointing to supportive fundamentals underpinning the fiscal strategy.
The 2026 BPS, which is the fourth under the Kenya Kwanza Administration, will now be submitted to Parliament.
Once considered and adopted, it will guide the Government’s fiscal strategy and Budget-making process for the 2026/27 financial year, shaping spending priorities at both national and county levels.
