NAIROBI, Kenya – Kenya’s revenue performance for the financial year 2024/25 closed below target, with the National Treasury reporting a Sh67 billion shortfall in total collections against projections, underscoring the persistent fiscal pressures facing the economy.
Data from the FY2024/25 Budget Performance Report shows total revenues reached Sh2.92 trillion compared to the Sh2.99 trillion target.
Ordinary revenue fell short by KSh76 billion, with all major tax heads underperforming except import duty and VAT. Revenue growth slowed to 8 percent, compared with 14.5 percent in the previous year.
“Despite mid-year revisions, we still registered revenue shortfalls in excess of 1 percent of GDP over two successive financial years, leading to budget revisions that dent credibility of the budget,” the Treasury report stated.
Expenditure stood at Sh3.97 trillion, which was Sh75.1 billion below target due to weaker disbursements.
Recurrent spending underperformed by Sh46.8 billion, development spending by KSh18.9 billion, while transfers to counties missed the target by Sh9.4 billion.
The fiscal deficit for the year was recorded at Sh1.01 trillion, or 5.8 percent of GDP, consistent with government projections.
The gap was financed through net domestic borrowing of Sh841.2 billion and net foreign borrowing of Sh178.6 billion.
“Fiscal pressures were heightened by drought and flood emergencies, salary shortfalls from recruitments and implementation of Collective Bargaining Agreements, as well as increased security interventions.”
The Treasury also flagged structural risks to fiscal stability, including rising contingent liabilities from state-owned enterprises and public-private partnerships, carryover of pending bills, and new mid-year expenditure requests under Article 223 of the Constitution.
Expanded social spending, particularly cash transfer programmes and education reforms, added to the strain.
Economists caution that Kenya’s repeated revenue shortfalls and reliance on borrowing to plug deficits could undermine fiscal credibility and investor confidence.
The government is under increasing pressure to strengthen tax administration, broaden the revenue base, and improve expenditure efficiency while balancing demands for social services and development.
