Experts read flaws in 2025/2026 budget, term it overambitious

Speaking to Citizen TV on Thursday, they highlighted the flaws in the proposed estimates by the National Treasury, which they argue will be threatened by revenue underperformance against an ambitious expenditure.

The National Cohesion and Integration Commission (NCIC) Deputy Director Liban Guyo termed the budget overambitious, noting that a spike in borrowing - domestic and external - and government service fees will be witnessed.

"It's an overambitious budget. Kenya Revenue Authority (KRA) is projected to collect Ksh.2.75 billion and the gap will be bridged by borrowing locally and internationally. But KRA has not met the target before so if they cast their net wide and focus on individuals and collect more tax," Guyo noted.

Kenya Association of Manufacturers (KAM) Chief Executive Officer Tobias Alando noted that the government should incentivize key contributors to the economy, among them manufacturing, tourism, service and agriculture, to boost revenue generation and meet the ambitious target.

When goods are moved from zero-rated to tax-exempt, manufacturers will incur an input VAT, resulting in higher prices for consumers

"We need to be cognisant of how the budget can stimulate other sectors of the economy to contribute. If the government provides clear incentives through this budget, achieving the Ksh.4.2 trillion target will be possible," he said.

Neema Lois Wangui, a Programs Support officer at Bajeti Hub read a flaw in the mismatch between national expenditure and revenue, noting that achieving the targets is not certain.

"When we assess the expenditure, it is important to compare it with the revenue. Historically, we have not met our revenue targets, yet we continue to increase our expenditure," she noted.

Treasury projects to collect Ksh.2.7 trillion in revenue collection, equivalent to 64 per cent of the funding required, and collect Ksh.560 billion in government levies and fees, in the form of Appropriations-in-Aid. 

That will push the total revenue to Ksh.3.3 trillion, leaving a budget gap of nearly Ksh.900 billion.

With grants of Ksh.46.9 billion expected, the National Treasury faces a budget deficit of about Ksh.876 billion to be financed through borrowing.