The Cabinet has approved the 2025 Budget Policy Statement (BPS), setting the country’s total budget for the 2025/26 financial year at Ksh 4.2 trillion.
The statement, which will be forwarded to Parliament for further deliberation, outlines key government priorities, including economic growth, fiscal stability, and inclusive green development.
According to the BPS, total expenditure for the financial year will constitute 22.1% of Kenya’s Gross Domestic Product (GDP).
Of the Ksh 4.2 trillion budget, Ksh 3.09 trillion has been allocated for recurrent expenditure, Ksh 725.1 billion for development projects, Ksh 436.7 billion for county transfers, and Ksh 5 billion for the Contingency Fund.
Under the Division of Revenue Bill 2025, the National Government has proposed a shareable revenue of Ksh 2.8 trillion.
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Out of this, county governments will receive Ksh 405.1 billion as their equitable share and an additional Ksh 10.6 billion through the Equalisation Fund.
The county allocation represents 25.8% of the most recent audited revenue of Ksh 1.57 trillion from the 2020/21 financial year, in line with constitutional requirements.
The County Allocation Revenue Bill 2025 will distribute these funds based on the Third Basis Formula.
Additionally, the County Government Additional Allocation Bill 2025 proposes an extra Ksh 69.8 billion, comprising Ksh 12.89 billion from the National Government and Ksh 56.91 billion from development partners.
With these additional resources, total county transfers for the 2025/26 fiscal year will amount to Ksh 474.87 billion.
