The National Assembly Finance and National Planning Committee has called for an urgent review of the national budget, warning that the growing conflict involving the United States, Israel, and Iran is already hurting Kenya’s economy and could derail revenue projections and government spending plans.
The lawmakers said the ongoing tensions have shaken global energy and trade markets after shipping routes through the Strait of Hormuz were disrupted, pushing up crude oil prices and increasing inflation pressure across the world.
While meeting officials from the State Department for the National Treasury to review budget estimates on Tuesday, the Committee said the effects were already being felt locally, including through a strike by transport operators, and cautioned against maintaining overly ambitious revenue projections under the current circumstances.
Committee Chairperson Kuria Kimani said Parliament would need to revisit the budgets submitted by Ministries, Departments, and Agencies after hearing their presentations so that allocations can reflect the changing economic environment.
“We need to create time after these presentations to align the budgets with the realities of this conflict and which have already started to affect our economic outlook”, he noted.
The lawmakers observed that Parliament had earlier approved a Sh4.7 trillion budget ceiling during deliberations on the Budget Policy Statement, but said the latest global developments now demand fresh consideration.
Kitui Rural MP David Mboni urged Treasury officials to factor the rising cost of living into their planning and revenue forecasts.
“Hon. Chair, I hope the Department is taking cognizance of what is happening globally and locally and how it affects the cost of living. You need to make that consideration when you are doing your projections”, Hon. David Mboni (Kitui Rural) stated.
Butula MP Joseph Oyula also backed calls for a review, warning that the country risks facing serious budget challenges if the situation worsens.
“Hon. Chair, you will note that yesterday and today, there has been no revenues collected. We cannot sit here and budget as usual when the situation looks gloomy. To avoid future problems with the budget, we need to relook at the budget and come up with a scenario we can manage in the future”, he held.
Members also questioned Treasury officials over poor revenue collection by the Kenya Revenue Authority, noting that the tax agency had so far collected only Sh1.815 trillion against a target of Sh2.7 trillion with only one quarter left before the end of the financial year.
“In the last three quarters , you have only managed to collect Sh1.815 trillion out the projected 2.7. trillion. Will you be able to achieve your target with only one quarter remaining in this Financial Year?”, Hon. Julius Rutto (Kesses) asked.
Homa Bay Town MP Peter Kaluma called for reduced government spending and stronger action against tax leakages within KRA, saying the country faces growing financial pressure ahead of next year’s elections.
“We are facing a potentially huge expenditure for elections next year while the Iran conflict is beyond our control. I was expecting a budget reduction, with only essential programs that we really require to fund. The revenue outlook is also not good. How are we going to fund the next budget? We need to reduce tax leakages within KRA”, he observed.
Treasury officials led by Principal Administrative Secretary Samson Wangusi told the Committee that measures had already been put in place to protect economic stability despite the difficult environment.
Wangusi, who represented Treasury Principal Secretary Chris Kiptoo, said the government plans to maintain inflation within the required range, keep foreign exchange reserves at a minimum of five months of import cover, and increase ordinary revenue collection from Sh2.744 trillion to Sh2.9019 trillion in the 2026/27 financial year.
He also said the Treasury was working toward removing Kenya from the Financial Action Task Force grey list through implementation of measures targeting money laundering, terrorism financing, and proliferation financing.
Documents tabled before the Committee showed that the State Department for the National Treasury received annual estimates amounting to Sh132.4677 billion compared to the 2026 Budget Policy Statement allocation of Sh132.4568 billion, reflecting a positive variation of Sh10.9 million.
However, lawmakers raised concerns over a Sh5 billion allocation for public participation, questioning why the amount had doubled and why more resources had not been directed toward educating Kenyans on the Finance Bill.
“I have seen an allocation of Sh5 billion for public participation. What kind of public participation are you carrying out? Why haven’t we seen these monies deployed to public participation exercises during the consideration of the Finance Bill?”, Hon. Rutto asked.
The Committee also sought updates on Treasury’s planned acquisition of Jubilee House in Nairobi’s Central Business District and asked when the department expects to relocate to the building.
Lawmakers further demanded progress reports on the government’s transition from a cash-based accounting system to an accrual accounting system, a process that has been underway for the past three years.
In response, Treasury officials said progress had been made but noted that the Integrated Financial Management Information System requires urgent upgrades after operating for more than a decade.
In a separate sitting, the Committee also met officials from the Commission for Revenue Allocation led by Commissioner Fatuma Gedi.
CRA Chief Executive Officer CPA Roble Nuno appealed for increased funding, saying the Commission was facing a budget shortfall of Sh613.2 million that was affecting implementation of its mandate.
“Over the years, the Commission has faced persistent budgetary constraints that have hindered the effective execution of its mandate. During the planning period, a significant resource shortfall of Sh613.2 has emerged, stemming from a budget allocation of Sh569 million for recurrent and development expenditure”, CPA Nuno explained.
The Committee is expected to continue meeting other agencies under its oversight before preparing its final report for the Budget and Appropriations Committee.
The report is expected to push for tighter spending controls as Parliament seeks ways to manage rising fiscal deficits and growing public debt amid fears of a worsening global economic crisis.