President William Ruto chaired a Special Cabinet meeting at State House, Nairobi, on Tuesday, February 11, 2025, where the Cabinet approved the 2025 Budget Policy Statement (BPS).
The statement, which will now be forwarded to Parliament, sets a KSh4.2 trillion budget for the 2025/26 financial year.
The total expenditure, equivalent to 22.1% of GDP, includes KSh3.09 trillion for recurrent spending, KSh725.1 billion for development, KSh436.7 billion in county transfers, and KSh5 billion for the Contingency Fund.
How much will counties get from national government in 2025?
Under the Division of Revenue Bill 2025, the National Government proposes a shareable revenue of KSh2.8 trillion, with KSh405.1 billion allocated to county governments as an equitable share and KSh10.6 billion for the Equalisation Fund.
The county allocation represents 25.8% of the most recent audited revenue (KSh1.57 trillion from the 2020/21 financial year), aligning with constitutional requirements.
Meanwhile, the County Allocation Revenue Bill 2025 will distribute the county share based on the Third Basis Formula, while the County Governments Additional Allocation Bill 2025 proposes an extra Ksh 69.8 billion – Ksh 12.89 billion from the National Government and Ksh 56.91 billion from development partners.
With these additional funds, total county transfers for 2025/26 will amount to Ksh 474.87 billion.
The 2025 Budget Policy Statement outlines the government’s economic priorities, focusing on sustaining growth, ensuring fiscal stability, and promoting inclusive green development.
Under the Bottom-Up Economic Transformation Agenda, GDP growth rebounded to 5.6% in 2023, up from 4.9% in 2022, driven by a strong recovery in agriculture after two years of drought.
Projected Kenyan economic growth in 2025
Growth is projected to remain stable at 5.3% in 2025 and 2026, supported by increased agricultural productivity, a resilient services sector, and strategic government interventions.
To maintain economic momentum, the government has outlined six key priorities: reducing the cost of living, eradicating hunger, creating jobs, expanding the tax base, improving foreign exchange balances, and fostering inclusive growth. These will be achieved through strategic investments in key economic sectors, strengthening production and market access, and attracting local and foreign investments.
