Cabinet Secretary for Treasury and National Planning John Mbadi has said that Kenya’s Ministries Departments and Agencies (MDA’s) entire budgets will have to be justified and approved in the 2025/26 Financial Year as the government entrenches the adopted Zero-Based Budgeting (ZBB) approach.
- •The ZBB approach requires expenditure proposals to compete for funding on an equal basis – starting afresh (from zero) each financial year.
- •This means that the MDA’s entire budget needs to be justified and approved, rather than just being based on historical trends which is generally incremental in nature.
- •This is aimed at curtailing misallocation of resources inherent in incremental approach and eliminate unnecessary costs associated with inefficiencies and duplication in public spending.
“To implement Zero Based Budgeting, the National Treasury has developed the Budget Costing Tool in the IFMIS Budget Module for the National Government which has incorporated standardized costing methodologies to streamline calculation of budget baselines and prioritization to give credible base for preparation of budget estimates,” John Mbadi, Cabinet Secretary, National Treasury and Economic Planning said.
“I expect that Sector Working Groups will ensure that all expenditure items in Financial Year 2025/26 Budget are justified and emphasis is placed on allocating the limited resources based on programme efficiency and requirements rather than incremental budgeting,” he added.
At the launch of Financial Year 2025/26 and the medium-term budget preparation process, the CS said based on global developments and the combination of elevated inflation and high interest rates, the FY2025/26 and the medium-term budget is being framed and prepared with focus on implementation of a growth responsive fiscal consolidation plan designed towards slowing down public debt without compromising service delivery.
The focus will be on agricultural transformation, Micro, Small and Medium Enterprise (MSME) Economy, Housing and Settlement, Healthcare, and Digital Superhighway and Creative Economy.
the launch of Financial Year 2025/26 and the medium-term budget preparation process comes on the back of a mix of economic environment within which the country operates. In the global scene, economic growth is expected to remain subdued over the medium-term as the effects of high inflation, restrictive macroeconomic policies, geopolitical tensions, and challenges in the Chinese economy weigh on the outlook.
For many countries, tackling inflation remains the primary focus but as the inflationary pressures continue to ease, the global policy focus will increasingly shift to managing other risks to growth, such as climate change, and high debt.