Government revises Sh4.3 trillion budget to save costs
This decision is part of wider cost-cutting reforms meant to curb rising public debt and redirect government funds toward essential services.
The government has begun revising its Sh4.3 trillion budget to align spending with new austerity plans aimed at cutting Kenya’s fiscal deficit to 4.5 per cent of GDP in the 2025/26 financial year.
During a Cabinet meeting held at State House on Tuesday and chaired by President William Ruto, ministers were instructed to work closely with the National Treasury to determine the required budget changes. The updated estimates will be submitted to Parliament after the adjustments.
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This decision is part of wider cost-cutting reforms meant to curb rising public debt and redirect government funds toward essential services.
“These changes are part of ‘broader austerity measures designed to strengthen fiscal discipline, reduce public debt vulnerabilities, and create the fiscal space necessary to deliver essential public goods and services,’” the Cabinet statement read.
In 2023/24, Kenya’s fiscal deficit stood at 5.3 per cent. The government is now focused on reducing this gap by adjusting its spending plans and realigning priorities.
The Cabinet also highlighted the steps already taken to ease pressure on public resources. Among them is the planned dissolution of at least 47 state corporations with overlapping roles, announced in July 2024. The move is expected to save on operational and maintenance costs.
“Resulting in the elimination of their operational and maintenance costs, and their functions will be integrated into the respective line ministries. Staff currently employed by the affected corporations will be transferred to ministries and other state agencies,” President Ruto stated.
Further cost-saving measures include halting the recruitment of Chief Administrative Secretaries (CAS), reducing government advisers by half, and cutting confidential budgets in Executive offices.
The President has also ordered that the budgets for the Offices of the First Lady, the Second Lady, and the Spouse of the Prime Cabinet Secretary be removed.
In addition to restructuring spending, the government is reviewing its overall approach to budget management to meet financial obligations while protecting core services.
Austerity measures typically involve controlling government spending or raising taxes, but the current administration is aiming to cut unnecessary expenditure while ensuring essential programmes remain funded.
These measures, if fully implemented, are expected to free up resources for key public services and promote long-term financial stability.
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