You can smell 'Election 2027' in State House's growing appetite for money

“What is the use of government?” somebody asked on X. This painful question followed the unfortunate fatalities from last week’s flooding, especially in Nairobi.

As far as one can tell, we just experienced heavy rains and floods, and the pain and damage therefrom, in almost half of our counties; less than a fortnight after millions faced starvation occasioned by drought in, again, almost half of our counties. You simply cannot make this stuff up. Woe forbid the mega-tragedy we would face if hit by, say, an earthquake.

In the face of these events, the consensus among Kenyans seems to be three-fold. Government doesn’t plan. And even when it does, responses are slow. So, we are basically on our own.

On the other side, officialdom offers two responses. Throw bags of money at the problem (more taxes on us, and more tenders for them). Take more responsibility as Kenyans.  In other words, it’s our fault, and it’s all on us. 

You might want to think about this when, today, the broad-based government presents Kenyans with its report on implementation of the 10-point agenda under the ODM-UDA Memorandum of Understanding. 

In the meantime, we are still in budget season (is there ever a time we aren’t? We seem to spend 90 per cent of our time thinking about budgeting, and only 10 per cent on actual implementation and results). 

So even as Parliament finalizes the 2026 Budget Policy Statement (NPS), covering our national government budget for fiscal 2026/27 and the medium-term, we have the first supplementary estimates (Supplementary 1) for ongoing fiscal 2025/26.

Our intrepid media has been quick to highlight the eyebrow-raising Supplementary I estimates for State House, especially since half of the additional request has already been spent.

Think of a budget of Sh8.6 billion, raised by Sh8.4 billion to Sh17 billion, but Sh4.5 billion of the extra Sh8.4 billion is already Treasury, not Parliament, approved, and Sh4.4 billion disbursed via exchequer. 

Rubber stamp

You can almost smell “Election 2027” in those extra shillings. It isn’t about new State Lodges, but State House Nairobi, where the biggest line-item increases are Sh1.7 billion for domestic travel, Sh1.3 billion for hospitality supplies and services and Sh4 billion for a nebulous item titled “other operating expenses”. 

The National Assembly is being asked to retroactively “rubber stamp” most of this spending after the fact. 

Actually, from the Supplementary 1 total of Sh317 billion to be approved by MPs, Sh246 billion is already Treasury approved, and Sh186 billion has already been disbursed. What is this special spending under Article 223? Everything from salary shortfalls to security operations to, guess what, disaster management! 

Treasury at least acknowledges that Supplementary 1 breaches the 10 per cent constitutional threshold from a national government perspective (the request to Parliament adds up to 11.1 per cent of budget). But this is only one part of the story.

Even without a detailed line-by-line analysis, Supplementary I is already painting an alarming picture about where our fiscus is headed. What does this picture look like? 

Let’s start at the beginning. The current fiscal 2025/26 opened with an official spending budget of Sh4.291 trillion, excluding debt redemptions.

When we threw in these redemptions, then budgeted at Sh804 billion, we were looking at a gross budget of Sh5.095 trillion, against revenue plus grants of Sh3.369 trillion, leaving us short by Sh1.726 trillion. Excluding redemptions, we counted the deficit as Sh922 billion. 

For the record, the 2026 BPS adjusts the original spending total downwards to 4.270 trillion, which means a lower deficit of Sh901 billion excluding debt redemptions and Sh1.705 trillion when they are included. 

The BPS  also tells us that half way through 2025/26, revenues plus grants was short by Sh124 billion, with less spending than planned by Sh77 billion. 

It then projects full-year spending at Sh4.533 trillion against a new revenue plus grant estimate of Sh3.392 trillion, leaving us with a deficit of Sh1.141 trillion; Sh219 billion (against the original deficit) or Sh240 trillion (per BPS) more than planned. 

If we add the original Sh804 billion in debt redemption, we are talking of a Sh1.945 trillion gap in our gross 5.337 trillion budget. 

Debt redemptions

Now, let’s go back to Supplementary 1 released last week.  In the macro picture, 2025/26 revenues (at 17.9 per cent of GDP) and grants are now estimated at Sh3.409 trillion while spending is projected at Sh4.571 trillion (24.1 per cent of GDP), leaving a deficit of Sh1.162 trillion.

The math doesn’t quite math because Supplementary 1 additional costs of Sh317 billion take us to a spending total of Sh4.587 trillion (using BPS Sh4.270 trillion as the original budget), or a deficit of Sh.1.178 trillion.  Oh, but there is more! 

Remember debt redemptions? Well, the latest 2025/26 estimate is up from Sh804 billion to Sh1.218 trillion (yes, we will hit a record Sh2.345 trillion in total debt service this year). So, in the gross terms we ignore, we have a Sh2.396 trillion shortfall in our Sh5.805 budget (using Sh4.587 trillion as the actual revised budget).  It doesn’t get better soon.  Total debt service is projected at Sh2.223 trillion, Sh2.347 trillion, Sh2.419 trillion, Sh2.637 trillion and Sh2.474 trillion between 2026/27 and 2030/31, or Sh12.1 trillion in five years.  The only way this works without a budget surplus is even more borrowing. 

Don’t forget we are only talking about the first supplementary budget; we normally have two every year. 

The madness doesn’t stop there.  If we go back to the BPS in its current form, we have a Sh3.588 trillion in 2026/27 revenue and grants against spending of Sh4.704 trillion, leaving us with a deficit of Sh1.116 trillion.  But that’s before two realities.

First, next year’s debt redemption (part of the debt service above) amounting to Sh1.029 trillion, which takes the shortfall up to Sh2.145 trillion in a Sh5.733 trillion gross budget. 

Second, as observed, we probably had up to Sh500 billion in additional 2026/27 requests going into Parliament’s sector committees before they get to the Budget and Appropriations Committee. 

That’s potentially a Sh6 trillion-plus budget on Sh3.5 trillion in receipts, before we factor in final 2025/26 reality. 

Without sounding alarmist, there is something wrong with our fiscus which Supplementary 1 illuminates.  It reflects spending that is increasingly out of control, and spending behaviour that isn’t changing soon. 

IMF advise

Anybody familiar with our budget process will know it’s more casino-like gambling than actual negotiation; Treasury sets budget ceilings; MDA’s overbid for resources, Treasury and Parliament cut these bids back towards the ceilings, and then MDAs rebid their shortfalls through supplementaries. Now throw in 2027. 

And here’s the thing.  It is often said we don’t have a revenue problem, but an expenditure one.  If we agree it’s probably both, doesn’t this reflect our wider economic problem in two ways?

First, in treating government as the same thing as the economy in theory and practice. Second, as argued before, in failing to figure how to transform our resource endowments into incomes and wealth, especially in counties. 

Here is final food for thought.  In its recent visit, the IMF advised on three things we must seriously focus on – fiscal discipline (sticking to targets), fiscal credibility (showing markets that we can stick to targets) and resilience to external shocks (like current happenings in the Middle East).

You don’t need a telescopic lens to see the first two issues pervading our current budget context. 

Again, what is a government for?