By Benadeta Mwaura - Reporter
Kenya, June 05, 2026 - The National Assembly has approved the 2026 Budget Policy Statement (BPS), paving the way for a Sh2.878 trillion national government spending framework that will guide budget allocations and fiscal priorities for the 2026/27 financial year.
The approval provides the clearest indication yet of how the government intends to allocate public resources amid mounting pressure to balance development spending, debt obligations and fiscal consolidation.
Under the approved framework, the Executive will receive the largest share of the budget at KSh2.797 trillion, while Parliament has been allocated KSh50.78 billion and the Judiciary KSh30.44 billion.
The Budget Policy Statement serves as the blueprint upon which detailed budget estimates are prepared before the annual budget is presented to Parliament.
Counties Receive KSh420 Billion#
The approved fiscal framework also safeguards funding for devolved units, with county governments set to receive KSh420 billion as their equitable share of national revenue.
In addition, lawmakers approved KSh75.69 billion in additional allocations to counties, while the Equalisation Fund will receive KSh9.6 billion to finance basic services in historically marginalized regions.
The allocations are expected to support critical county functions including healthcare, agriculture, water services, local infrastructure and trade development.
Deficit Maintained at 5.3%#
Parliament also endorsed the government's fiscal strategy of maintaining the budget deficit at 5.3% of Gross Domestic Product (GDP), reflecting Treasury's continued efforts to reduce borrowing while sustaining public investment.
The target comes as Kenya faces growing debt-servicing obligations, with public debt approaching the Sh13 trillion mark and debt repayments consuming an increasingly significant portion of government revenue.
Treasury has repeatedly argued that gradual fiscal consolidation remains necessary to safeguard macroeconomic stability and maintain investor confidence.
Security and Education Dominate Spending#
As in previous years, security and education remain among the largest beneficiaries of public spending.
The Ministry of Defence has been allocated KSh241.36 billion, while the National Police Service will receive KSh143.19 billion, underscoring the government's continued focus on national security.
Education commands the largest share of recurrent spending, with the Teachers Service Commission (TSC) receiving KSh422.95 billion, largely for teacher salaries and recruitment.
The State Department for Basic Education has been allocated KSh134.78 billion, while the State Department for Higher Education and Research will receive KSh160.09 billion to support universities, technical institutions and research programmes.
The substantial allocations reflect the government's continued emphasis on human capital development despite fiscal constraints.
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Housing and Roads Prioritized#
Infrastructure remains another key priority area.
The State Department for Roads has been allocated KSh232.11 billion, while the State Department for Housing and Urban Development will receive KSh139.33 billion.
The housing allocation is expected to support the Affordable Housing Programme, one of President William Ruto's flagship initiatives aimed at addressing the country's housing deficit while creating employment opportunities.
Health Sector Receives Over KSh167 Billion#
The health sector is set to receive substantial funding as the government continues implementing healthcare reforms under the Social Health Authority (SHA).
The State Department for Medical Services has been allocated KSh134.3 billion, while the State Department for Public Health and Professional Standards will receive KSh33.1 billion.
The funds are expected to support hospital operations, specialized treatment services, disease prevention programmes and healthcare infrastructure development.
Parliament Pushes Transparency and State Agency Reforms#
Beyond spending allocations, lawmakers adopted several policy directives aimed at improving public financial management.
Among the key resolutions is a requirement for the National Treasury to rationalize and merge non-viable state corporations by October 2026 as part of efforts to reduce waste, eliminate duplication of functions and improve efficiency within government.
The National Assembly also directed Treasury to publish detailed exchequer releases for government programmes, a move intended to strengthen transparency and enable Parliament and the public to better track expenditure.
Foundation for Budget 2026/27#
The approval of the Budget Policy Statement marks a critical milestone in Kenya's budget-making process and comes at a time when debate over taxation, public debt and government spending remains intense.
With public participation on the Finance Bill 2026 having recently concluded amid widespread concerns over the cost of living, attention will now shift to how Treasury translates the approved spending ceilings into detailed budget estimates.
The final budget, expected later this month, will reveal how the government intends to finance its ambitious spending plans while managing debt pressures and responding to growing demands for economic relief from households and businesses.