By Benadeta Mwaura - Reporter
Kenya, 11 June 2026 - Treasury Cabinet Secretary John Mbadi has defended the government's proposed KSh 4.82 trillion budget for the 2026/27 financial year, arguing that Kenya has limited options for financing public expenditure as the country grapples with high debt obligations, slowing economic growth and mounting demands for tax relief.
Speaking ahead of the budget presentation to Parliament, Mbadi said the government is attempting to strike a delicate balance between funding essential services and avoiding additional pressure on taxpayers already struggling with the rising cost of living.
The proposed budget comes at a time when Kenyans are increasingly questioning the sustainability of government spending, with many stakeholders calling for lower taxes, reduced borrowing and greater efficiency in public expenditure.
According to Treasury estimates, the government expects to raise approximately KSh3.63 trillion in revenue, leaving a financing gap of about KSh1.1 trillion, equivalent to 5.3% of GDP.
Appearing before the National Assembly Budget and Appropriations Committee, Mbadi explained that the budget remains anchored on the government's Bottom-Up Economic Transformation Agenda (BETA), with priority allocations directed toward agriculture, healthcare, housing, digital infrastructure, education and support for small businesses.
However, the Treasury chief acknowledged that Kenya's fiscal position remains under considerable strain.
"The moment the projected economic growth comes down, revenue projection will come down. And if revenue is down, how do you finance the same budget? Either by borrowing or taxation," Mbadi said.
He was quick to add that neither option is attractive in the current environment.
"We have no option to come for more taxes. Borrowing is another no-go zone," he stated.
The remarks come as the Finance Bill 2026 continues to attract public scrutiny over several controversial provisions.
Among the most debated proposals are measures affecting digital financial services, rental income taxation, access to financial data by tax authorities and changes affecting mobile phones and electronic devices.
Critics argue that while Treasury insists it is not introducing major new taxes, some of the proposals could ultimately increase the cost of living by raising the cost of everyday transactions and essential services.
Mbadi has maintained that the Finance Bill is primarily focused on improving tax administration and ensuring fairness in revenue collection rather than imposing broad-based tax increases.
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"Let everyone who is supposed to pay tax pay their fair share. That is what is in the Finance Bill," Mbadi said in recent remarks defending the reforms.
The Treasury has repeatedly emphasized that widening the tax base and sealing loopholes is critical if Kenya is to reduce reliance on borrowing while maintaining public services and development programmes.
Similar arguments were advanced during previous finance bills, with Mbadi insisting that stronger enforcement is necessary because many high-income earners remain outside the tax net.
Yet the challenge facing Treasury remains immense.
Mbadi recently revealed that debt servicing alone consumes roughly KSh1.5 trillion, while salaries, county allocations, education funding, security spending and social protection programmes account for a substantial share of the remaining revenue.
"This budget is so rigid. It is inflexible. We have boxed ourselves," he admitted.
The budget is also being prepared against a backdrop of global uncertainty. Rising oil prices linked to the ongoing Middle East conflict have increased concerns about inflation, fuel costs and economic growth across East Africa.
These external pressures could further complicate Treasury's efforts to narrow the fiscal deficit while supporting economic recovery.
As Mbadi presents the budget to Parliament, attention is likely to focus not only on government spending plans but also on whether the Finance Bill's contentious provisions survive parliamentary scrutiny after weeks of intense public participation and stakeholder submissions.
For many Kenyans, the central question remains whether the government can fund its ambitions without imposing additional burdens on households already grappling with higher living costs, rising deductions and economic uncertainty.