The Kenyan government has unveiled a strategic plan to cap the national budget deficit at 4.5% of Gross Domestic Product (GDP) starting from the 2024/2025 financial year. The long-term goal is to reduce the deficit further to 2.7% of GDP by 2028/2029, signaling a shift towards sustainable public finance management.
This ambitious fiscal consolidation drive comes at a time when the country grapples with persistent revenue shortfalls and soaring debt servicing costs, both of which have strained economic progress. Recognizing the urgency of the matter, the Cabinet, chaired by President William Ruto, approved sweeping budgetary realignments in April, aimed at trimming public expenditure and reducing the national debt burden.
President Ruto has since directed all ministries and state departments to conduct thorough expenditure reviews and align their budgets with the National Treasury’s framework. The move underscores the government’s commitment to eliminating inefficiencies and redirecting funds towards high-impact development initiatives.
As part of the cost-cutting measures, the government plans to dissolve at least 47 state corporations that have overlapping functions. Their roles will be integrated into respective ministries to enhance efficiency. Additionally, the number of government advisers will be slashed by 50%, and funding for the Offices of the First Lady, Spouse of the Deputy President, and Spouse of the Prime Cabinet Secretary will be eliminated.
Further, confidential budgets within executive offices will be scrapped, and Kenya will seek to refinance its international debt using more favorable concessional and green financing mechanisms.
These austerity measures are designed to create fiscal space for investment in critical sectors such as health, education, and infrastructure. By streamlining public expenditure and reducing fiscal vulnerabilities, the government aims to rebuild investor confidence, enhance service delivery, and place the country on a more sustainable economic trajectory.
With these reforms, Kenya signals a renewed resolve to manage its public finances prudently, even as it continues to navigate complex economic challenges both domestically and globally.
