Diego Schroeder
The National Treasury reported that KSh 1.77 trillion spent in first five months of financial year 2025/26 Public debt service dominated recurrent expenditure with KSh 865.8 billion spent, while development spending remained critically low In first five months, State House received 99% of its budgeted funds for the whole financial year, followed by the Office of the Deputy President Elijah Ntongai, an editor at TUKO.co.ke, has over four years of financial, business, and technology research and reporting experience, providing insights into Kenyan, African, and global trends.
The National Treasury has released its exchequer statement for the first five months of the 2025/26 financial year.
President William Ruto and Kindiki Kithure, the deputy president at State House. Photo: State House.
Source: Twitter The Gazette Notice issued by Treasury CS John Mbadi revealed that the government had spent KSh 1.77 trillion by November 28, 2025, against a full-year budget estimate of KSh 4.43 trillion.
The data showed a strong focus on servicing public debt and meeting recurrent obligations, while development spending and revenue collection lag significantly behind their annual targets.
Where has the bulk of the expenditure been directed? Government spending for the period was overwhelmingly directed towards mandatory and recurrent items, with public debt service consuming the largest share at KSh 865.8 billion, nearly half of all exchequer issues.
Recurrent expenditure on operations, salaries, and pensions totaled KSh 594.6 billion, while development spending lagged significantly at only KSh 121.8 billion, representing just 29.9% of its annual target.
County governments received KSh 136.95 billion of their equitable share, against a full-year allocation of KSh 415 billion.
Which offices have the highest exchequer issues? While some departments are yet to access half of their budgeted recurrent expenditures, the State House has already received 99% of its budgeted expenditure, followed closely by its associated offices.
Below is a list of the departments that have received the highest percentage of their budgeted estimates for the entire 2025/26 financial year:
Ministries/Departments/Agencies
Original Estimates (KSh.)
Exchequer Issues (KSh.)
Percentage of Exchequer Issues (%)
1
State House
7.68b
7.66b
99.71%
2
Office of the Deputy President
2.97b
2.52b
84.98%
3
State Department for Micro, Small and Medium Enterprises Development
1.44b
976.32m
67.93%
4
State Department for Public Health and Professional Standards
17.57b
11.43b
65.05%
5
National Intelligence Service
51.45b
30.94b
60.14%
6
State Department for Social Protection and Senior Citizens Affairs
29.03b
16.96b
58.43%
7
Office of the Registrar of Political Parties
2.49b
1.41b
56.79%
8
State Department for Internal Security and National Administration
31.73b
18.00b
56.73%
9
State Department for Youth Affairs and the Arts
2.05b
1.12b
54.49%
10
State Department for Devolution
1.33b
714.94m
53.71%
Is Kenya facing a debt crisis? According to the Treasury disclosures, the country collected tax revenue amounting to KSh 909.77 billion for the first five months of the 2025/26 financial year.
During the same period, the government spent KSh 865.77 billion to service public debts.
According to Daniel Kathali, an economist, the figures indicate a debt crisis that requires immediate intervention.
“Numbers do not lie. The situation we are in righ now is the definition of a crisis. If the government spent about 95% of its tax revenue on debt servicing, how much is left to cover other recurrent and development expenditures. For every KSh 100 that is collected from taxes, only KSh 5 was directed to development, healthcare, education and other government expenditures. This explains why the government has been borrowing heavily in the domestic market. We have a debt crisis and policy makers have to look at it from that perspective. We cannot continue borrowing without considering the generations that will have to pay, the country will sink in debt,” Kathali opined. How can Kenya reduce its rising debt burden? Earlier, World Bank economists outlined a five-point reform agenda to help Kenya reduce its rising debt burden while creating more productive employment opportunities.
The World Bank warned that the country’s debt, which has reached about 68% of GDP, is eroding development and other necessary government expenditures such as education and healthcare.
In their Public Finance Review, economists Jorge Tudela Pye, Marek Hanusch, and Precious Zikhali highlighted declining tax revenues, heavy spending on wages, and subsidies for underperforming state-owned enterprises (SOEs) as key factors widening Kenya’s fiscal gap.
They recommend reforms that reorganise resource collection and allocation, strengthen public trust and accountability, tighten governance and procurement to reduce leakages, simplify corporate taxes, rationalise subsidies, reduce fiscal risks from SOEs, and unlock economic potential in urban centers.
The economist opined that if fully implemented, the measures could lower Kenya’s debt to about 44% of GDP by 2035, boost private-sector activity, increase productivity, and restore real wage growth, while failure to act could deepen debt distress and leave young workers without meaningful opportunities.
Source: TUKO.co.ke
Source: Tuko.co.ke | Read the Full Story…
