NAIROBI, Kenya — The National Treasury has defended its proposed Sh4.785 trillion budget for the 2026/27 financial year amid mounting concerns from Members of Parliament over revenue collection, healthcare financing, and rising fiscal pressures.
The Budget and Appropriations Committee, chaired by Alego Usonga MP Samuel Atandi, on Wednesday engaged Treasury officials led by Cabinet Secretary John Mbadi during scrutiny of the FY2026/27 Budget Estimates and Medium-Term Fiscal Framework.
Treasury Defends Fiscal Deficit
Appearing before the committee, Mbadi defended the fiscal framework anchored on projected total expenditure of Sh4.785 trillion against expected total revenue, including Appropriations-in-Aid (A-I-A), of Sh3.629 trillion.
The gap leaves a projected fiscal deficit of Sh1.111 trillion, equivalent to 5.3pc of GDP.
According to the Treasury, the deficit will be financed through Sh995.7 billion in domestic borrowing and Sh116.2 billion in external borrowing.
Mbadi told lawmakers the government remains focused on balancing fiscal consolidation with economic growth despite external shocks, including global geopolitical tensions and rising oil prices.
“We remain committed to growth-supportive consolidation while ensuring resources reach priority sectors that directly impact citizens,” Mbadi told the committee.
The Treasury projects Kenya’s economy will grow by 5.0pc in 2026.
MPs Question Revenue Collection
Lawmakers raised concerns over revenue collection targets and the sustainability of the projections.
Rarieda MP David Ochieng questioned how the Treasury was incorporating county own-source revenue into the fiscal framework.
“What measures are you taking to factor in own source revenue from counties because we are losing a lot of money,” Ochieng posed.
In response, Treasury officials said the framework integrates reforms under the National Tax Policy and Medium-Term Revenue Strategy.
The reforms include digitisation of tax administration through the Kenya Revenue Authority (KRA), enhanced non-tax revenue collection by Ministries, Departments and Agencies (MDAs), land rent restructuring, and instant fines.
Mbadi also cited strengthened KRA enforcement systems as part of efforts to improve revenue mobilisation.
Concerns Over SHA Funding
The Social Health Authority (SHA) also featured prominently during the session.
Atandi raised concerns after submissions by the Health Committee suggested that increased funding could ease persistent healthcare challenges.
Tongaren MP John Chikati demanded accountability regarding SHA enrolment and utilisation.
“Over 27 million have registered for SHA. We need to know who has benefited. Out of the 27 million enrolled, who is paying premiums?” Chikati asked.
Treasury officials acknowledged that while over 27 million Kenyans have enrolled under SHA, only about five million are active contributors.
Of these, approximately four million contribute through payroll deductions, while about one million are voluntary contributors.
Mbadi, however, said detailed beneficiary records are held by the SHA Board and the Ministry of Health.
“We may not have all the figures here, but the SHA Board can provide them. We need to allocate more resources to primary healthcare,” he said.
The Treasury further stated that Kenya has deployed 107,831 Community Health Promoters and established 228 Primary Healthcare Networks as part of universal health coverage reforms.
Education and Pending Bills
Samburu West MP Naisula Lesuuda questioned the sustainability of education capitation and whether it should be prioritised as a first charge on the Exchequer.
Mbadi attributed pending bills to historical delays in exchequer releases but said the government had made progress in clearing arrears.
“We have been working over the past two financial years to ensure disbursements are up to date. Payments to counties, NG-CDF, and NGAAF are almost current,” he said.
The Treasury also confirmed continued prioritisation of teacher recruitment, including plans to hire 24,000 intern teachers.
Push for Digital Reforms
Kitutu Chache North MP Japheth Nyakundi questioned the effectiveness of the Electronic Government Procurement (EGP) system.
Mbadi said adoption had significantly improved across government institutions.
“We started slow, but today almost the entire government has onboarded EGP. Most MDAs have trained personnel using the system,” he stated.
He further disclosed plans to roll out an integrated county revenue collection system through the Intergovernmental Budget and Economic Council (IBEC) to harmonise manual and digital systems.
Committee Vice Chair Robert Pukose also sought clarification on the implementation of the Single Treasury Account following audit concerns raised by the Auditor-General.
Mbadi confirmed reforms were ongoing but acknowledged full consolidation had not yet been achieved.
BETA Priorities
The Treasury said the 2026/27 budget remains anchored on the Bottom-Up Economic Transformation Agenda (BETA) pillars of agriculture, MSMEs, affordable housing, digital economy, and healthcare.
Among the reforms highlighted were the expansion of the SHA, digitisation of land records under Ardhi Sasa, expansion of fibre optic infrastructure to over 80,000 kilometres, construction of 404 digital hubs, and training of more than 1.5 million youth under the Ajira programme.
The government also said over 214,000 affordable housing units are under construction across the country alongside expanded fertiliser and seed subsidy programmes.
The Budget and Appropriations Committee has concluded scrutiny of sectoral allocations and is expected to table its report before the National Assembly next Tuesday.
