Kenya will be implementing 32 Public-Private Partnership (PPP) projects worth Ksh 70 billion in FY 2025/26, focusing on priority sectors such as energy, water, housing, health, and transport.
- •To improve transparency and accountability, Treasury Cabinet Secretary John Mbadi told Parliament that a circular has been issued mandating disclosure for all Privately Initiated Proposals.
- •In May 2025, the National Treasury received a report recommending the creation of a PPP Implementation Trust Fund (PPP-ITF) to boost private sector investment, especially from institutional and retail players.
- •The proposed PPP regulations before Parliament are expected to streamline processes, improve project delivery, and unlock County-level PPP initiatives with support from development partners.
Mbadi made the revelation during the unveiling of KSh 4.29 trillion ($33 billion) budget for the 2025/26 financial year, balancing fiscal consolidation with strategic spending, even as the government pledged not to introduce new taxes following last year’s widespread public backlash.
“The social unrest precipitated by the Finance Bill, 2024, brought to the fore the import of values and principles of governance as enshrined in the Constitution of Kenya. In response and to win public trust, we have strengthened public participation in all policy formulation including budget making process,” the CS said.
Revenue Projections
The total revenue collection for FY 2025/26, including Appropriation-in-Aid, is projected at KSh 3,321.8 billion, equivalent to 17.2% of GDP. This comprises Ordinary revenue: KSh 2,754.7 billion (14.3% of GDP), Ministerial Appropriation-in-Aid: KSh 567.0 billion, grants: KSh 46.9 billion (0.2% of GDP).
The projections are underpinned by enhanced tax compliance, digitalization, and ongoing structural reforms aimed at expanding the tax base without raising rates.
Expenditure Breakdown
Total expenditure for the fiscal year is estimated at KSh 4,291.9 billion, representing 22.3% of GDP. This includes recurrent expenditure: KSh 3,134.4 billion (16.3% of GDP), development expenditure (including both domestically and externally financed projects): KSh 693.2 billion (3.6% of GDP),county government allocation: KSh 474.9 billion, of which KSh 405.1 billion will be disbursed as equitable share.
This reflects a continued focus on funding essential services, infrastructure, and devolution while maintaining spending discipline.
Fiscal Deficit and Borrowing Plans
The fiscal deficit is projected to narrow to KSh 923.2 billion, or 4.8% of GDP, down from 5.7% in FY 2024/25, signaling a shift toward fiscal consolidation.
The deficit will be financed through a mix of borrowing net external borrowing: KSh 287.7 billion (1.5% of GDP), net domestic borrowing: KSh 635.5 billion (3.3% of GDP).
The government emphasized its intent to reduce reliance on costly domestic debt and to strengthen partnerships with multilateral lenders to ensure long-term sustainability.
Economic Strategy in Focus
Treasury CS John Mbadi reiterated that the 2025/26 budget aligns with the government’s medium-term fiscal framework, aiming to restore debt sustainability, stimulate inclusive growth, and protect vulnerable populations. The delicate balance between austerity and investment comes amid political sensitivities and rising public demand for accountability.
