Money greed: State House blows Sh10.4b on travels, hospitality and car purchases

State House spent Sh10.4 billion in the first seven months of the 2025/26 financial year, nearly a third more than its entire annual allocation, even as the National Treasury reported a widening revenue shortfall that has cast doubt on the government’s fiscal projections.

The expenditure, detailed in Treasury documents presented to Parliament this week, exceeds the Sh7.7 billion budgeted for State Houses and lodges for the full year.

The Office of the Deputy President used Sh3.33 billion of its budget, also overshooting its annual budget allocation of Sh2.97 billion within the seven months.

The Executive Office of the President spent Sh2.5 billion of its Sh4.5 billion allocation during the period.

The spending surge at the State House and the Office of the Deputy President comes as revenue collections lag significantly behind target, seven months into the financial year. 

Tax revenues stood at Sh1.34 trillion as of January, reaching just 51 per cent of the Sh2.627 trillion ordinary tax collection target for the full year. With seven months elapsed, the government should have collected approximately 58 per cent of its annual target to remain on track.

The 51 per cent achieved instead signals a growing fiscal hole that aggressive tax enforcement on small businesses and professionals has so far failed to fill.

The Sh10.4 billion absorbed by State House alone in the same period already exceeds its full-year allocation, highlighting the widening disconnect between the government’s revenue mobilisation message and its own expenditure behaviour, even as ordinary Kenyans bear the weight of KRA’s digital tax dragnet.

The revenue gap has forced greater reliance on domestic borrowing, which reached Sh732.56 billion by January this year, inching closer to the Sh1.098 trillion that the government plans to borrow locally by the end of the financial year in June.

Interest payments now consume 39.8 per cent of ordinary revenue, up from 13.2 per cent a decade ago, sharply curtailing the state’s capacity to fund development.

Analysts say the Sh10.4 billion State House spending in seven months underscores a widening gulf between the Ruto administration’s austerity rhetoric and its fiscal reality, undermining the moral authority of its aggressive tax collection drive even as millions of Kenyans struggle with a high cost of living. 

While the Kenya Revenue Authority intensifies its digital dragnet on small traders, bar owners and professionals—pushing more transactions underground through real-time surveillance and bank integrations—public funds continue flowing freely toward presidential renovations and political activities at State House. 

“Ordinary citizens face mounting tax compliance burdens to bridge a Sh136.1 billion revenue shortfall, yet executive overspending persists, consuming nearly a third more than its entire annual allocation in just seven months,” said a senior government official who is not authorised to speak to the media. 

“For hard-pressed Kenyans watching their disposable income shrink through eTIMS-linked deductions while State House replaces colonial roofs and hosts partisan meetings, the government’s fiscal messaging—that painful tax measures are necessary for national stability—grows increasingly difficult to reconcile with the extravagance unfolding behind the gates.”

Development expenditure fell Sh33 billion below target in the first half, while recurrent spending exceeded projections by Sh10.9 billion. The Treasury attributed the revenue underperformance to “compliance gaps, administration challenges, and the impact of revenue-reducing measures introduced by the National Assembly in the Finance Act 2025.”

Ordinary revenue

Ordinary revenue as a share of GDP has declined from 18.1 per cent in 2013/14 to a projected 14.4 per cent this financial year, reflecting a narrowing tax base and faster growth in low-tax sectors such as agriculture.

Much of State House’s spending is understood to have gone toward renovation works that have continued despite the government utilising Sh10.7 billion on the refurbishment of presidential residences during the last two years of former President Uhuru Kenyatta’s tenure.

Under President William Ruto, the refurbishments have involved changes to flooring, roofing, driveways and interior finishes, along with the construction of a new presidential pavilion intended to reduce tent-hiring costs. The iconic hipped colonial roof with red terracotta tiles has been replaced with a flat roof, and twin chimneys removed.

The National Treasury has allocated Sh680.7 million for continued upgrading of presidential residences through 2027, with State House Nairobi scheduled for facelifts before the end of the current financial year in May.

Lawyer Soyinka Lempaa has filed a petition in court accusing Ruto of using public resources to advance his United Democratic Alliance (UDA) party’s interests ahead of the 2027 general election, despite the party receiving public funding through the Political Parties Fund.

“UDA is a registered political party and a private legal entity within the meaning of the Political Parties Act. It is already a beneficiary of public funding through the Political Parties Fund and operates its own offices, structures, and facilities for party purposes,” Lempaa said in his petition filed February 9.

“At no time has there been any public disclosure that the 3rd Respondent paid for, reimbursed, or otherwise lawfully defrayed the costs associated with the use of State House for these partisan activities,” he added.

As State spending overshoots targets, the Kenya Revenue Authority (KRA) has intensified collection efforts, despite surpassing its 2024/25 target by collecting Sh2.571 trillion against a projected Sh2.555 trillion.

From January 1, KRA entered a new phase of tax administration anchored on real-time transaction data, requiring income tax returns to undergo systematic validation against electronic datasets, including eTIMS invoice records, withholding tax returns, and customs import data.

KRA has integrated its iTax and iCMS systems with banks, telecommunications companies, including M-Pesa, and government agencies such as e-Citizen and IFMIS to gain visibility into financial transactions.

The authority has also been collecting taxes from the informal economy, requiring small traders, shops, bars, and restaurants to file transactions digitally before serving customers.

Economists have warned that excessive tax pressure may be driving activity underground. “Every new tax measure pushes more transactions underground,” said independent economist Ian Njoroge, echoing concerns previously raised by former Treasury Secretary Njuguna Ndung’u about the counterproductive nature of overtaxation.

Public debt stood at Sh12.05 trillion as of September 2025, with the present value of the total public debt-to-GDP ratio at 63.8 per cent, above the 55 per cent benchmark. The Treasury classifies the debt as “high risk” of distress, downgraded from moderate risk during the pandemic.

The fiscal deficit, inclusive of grants, stood at Sh518.1 billion by December, equivalent to 2.7 per cent of GDP against a target of 2.3 per cent.

Global ratings

Despite recent upgrades by Moody’s and S&P Global Ratings, which cited improved external liquidity and higher foreign exchange reserves, analysts say recurring revenue shortfalls remain a critical vulnerability.

The Treasury projects total revenue of Sh3.53 trillion for 2026/27, including appropriations-in-aid, with ordinary revenue targeted at Sh2.90 trillion. Overall expenditure is projected at Sh4.65 trillion, leaving a fiscal deficit of Sh1.11 trillion, equivalent to 5.3 per cent of GDP.

“We face a difficult balancing act of boosting domestic revenues to protect critical spending in priority areas while meeting heavy debt service obligations,” the Treasury said in its presentation to Parliament.

With under two years to the 2027 general elections, the revenue miss casts doubt on the government’s ability to stabilise its finances while maintaining the high spending levels recorded at State House in recent months.