Pre-poll gamble: How Ruto's Sh4.7tr budget aims to lift hustlers' lives

President William Ruto’s government has unveiled a national budget blueprint designed to accelerate his core economic pledges, setting the stage for a high-stakes fiscal year that will directly shape his campaign for a second term in August 2027. 

The draft 2026 Budget Policy Statement (BPS), published on Friday, and reviewed by The Standard, lays out Ruto’s spending, borrowing, and revenue strategy for the 18 months leading up to Kenyans going to the polls. 

This is a period when analysts say the fifth president must convincingly demonstrate that his “Bottom-Up” model has tangibly improved lives of ordinary Kenyan amid persistent cost-of-living pressures being felt across the country as the year comes to an end.  

Since his inauguration on September 13, 2022, President Ruto has anchored his presidency on the Bottom-Up Economic Transformation Agenda (BETA). 

His government has promised to uplift the working poor, smallholder farmers and small business owners who he calls the “hustlers” who formed his electoral base. His 2027 re-election bid hinges on proving this model worked, analysts said.  

Based on the figures provided in the 2026 Draft Budget Policy Statement, the national budget has expanded significantly for the upcoming fiscal year and over the medium term to follow through the delivery of his lofty promises.  

For the fiscal year beginning in July 2026, the reorganized broad based government plans to spend Sh4.73 trillion, which is Sh425.7 billion (9.9 per cent) more than the approved budget for the current year (2025/26).  

The John Mbadi led Treasury says this expansion is primarily to finance “continued investment in the BETA pillars like agriculture, housing and healthcare.” 

This increased spending will be funded by a combination of higher projected revenues (Sh3.46 trillion in FY26/27, up from Sh3.32 trillion) and a larger fiscal deficit (Sh1.1 trillion, up from Sh901 billion), meaning the government will borrow more to cover the gap. 

The Ruto government says the economy shows signs of resilience, with growth recovering to 4.7 per cent in 2024 and projected at 5.3 per cent for 2025 and 2026.  

Inflation has also cooled to 4.6 per cent and the shilling has stabilized.  

Analysts however say the core challenge remains translating macroeconomic gains into widespread, felt prosperity among ordinary Kenyans who remain restless amid widespread cost of living pain.  

Consequently analysts reckon the new proposed Ruto budget seeks to bridge this gap before the campaign season intensifies. 

His spending plan doubles down on signature on his earlier campaign pillars.  

“The 2026 budget is a deliberate acceleration of BETA’s five pillars, each chosen for its direct household impact and job creation potential,” said independent economist Ian Njoroge, 

On agriculture and food security, the Ruto budget plan commits to sustaining the fertiliser subsidy programme for 4.4 million farmers, following a 95 per cent surge in maize production since 2022 that helped lower staple food prices.  

New targets include distributing 3.5 million high-value fruit tree seedlings and expanding crop insurance nationwide. Additionally, Ruto plans to double down on his pet Affordable Housing project. 

With 214,057 units under construction, the government reckons the programme has generated over 428,000 jobs—a figure it promises will hit 1 million by 2026.  

The rollout of the new Social Health Insurance Fund (SHIF), now covering over 27 million Kenyans, will also be stepped up.  

The budget aims to complete universal enrollment.  

Boost for youth 

At the same time while targeting youth and the informal sector, the Ruto administration plans to scale the Hustler Fund to Sh100 billion and create 300,000+ digital jobs aimed at the country’s large, youthful demographic popularly known as Gen Z.  

However, analysts caution that financing these ambitions without triggering a debt crisis or painful austerity is Ruto’s biggest fiscal challenge. The Ruto budget reveals a two-pronged strategy. 

The main plan is the creation of a National Infrastructure Fund and a Sovereign Wealth Fund.  

The Infrastructure Fund aims to leverage private capital, targeting Sh5 trillion with a 1:10 public-to-private leverage ratio.  

Analysts say this is a strategic attempt to fund massive projects in energy, transport and agriculture without solely relying on new external debt that bloats the deficit.  

The Sovereign Wealth Fund, designed to manage resource revenues and savings, also aims to project long-term fiscal maturity. 

Despite these ambitious funds, the Treasury projects a path of fiscal consolidation. The overall deficit (including grants) is planned to narrow from 4.7 per cent of GDP in 2025/26 to 2.9 per cent by 2029/30.  

This is a delicate balance that analysts say promises discipline to international markets and the bilateral lenders such as the International Monetary Fund (IMF) which is in talks with Kenya over possible funding next year while simultaneously ramping up social and infrastructure spending.  

The Ruto plan assumes strong revenue growth and efficiency savings. A key element government says, “is reforming and partially privatizing state-owned enterprises like the Kenya Pipeline Company, which could generate one-off revenues of billions of shillings.” 

Tax policy in a pre-election year is politically explosive, and the budget statement avoids announcing major new taxes but reveals a focus on broadening the base and enhancing compliance, a less visible but potentially contentious approach experts add.  

Change to VAT 

The government, however, aims to raise the tax-to-GDP ratio towards 20 per cent by deepening tax administration reforms, leveraging technology, and scaling non-tax revenues.  

The document is also silent on changes to Value-Added Tax (VAT) or excise duty rates.  

However, with revenue targets ambitious, pressure will mount on the Kenya Revenue Authority (KRA) to meet collection goals experts say. 

Businesses and consumers may face more aggressive enforcement on existing taxes rather than new one's next year.  

The risk is that according to observers, this perceived “squeeze” could fuel anti-government sentiment if coupled with rising living costs. 

“President Ruto’s 2026 budget signals a shift from stabilization to a growth phase funded by innovative, off-budget vehicles designed to avoid a debt blowout,” said Njoroge.