State revises Sh4.3 trillion budget in austerity push

President William Ruto chairs a cabinet meeting at State House on April 29, 2025 / PCS

The Cabinet has ordered sweeping budget revisions as the government intensifies efforts to cut spending and reduce the fiscal deficit.

In a cabinet meeting chaired by President William Ruto at State House, the Cabinet directed ministries to work with the National Treasury to identify necessary adjustments.

The goal is to cap the fiscal deficit at 4.5 per cent of GDP in 2025/26, down from 5.3 per cent in 2023/24.

The original Sh4.3 trillion estimates will now be revised before being presented to Parliament.

These changes are part of “broader austerity measures designed to strengthen fiscal discipline, reduce public debt vulnerabilities, and create the fiscal space necessary to deliver essential public goods and services,” the statement said.

Austerity measures are economic policies implemented by governments to reduce public sector debt, often through spending cuts and/or tax increases. 

These measures aim to address budget deficits and ensure a country's ability to meet its financial obligations. 

They are done to reduce government spending that can involve cutting government programmes, freezing or reducing employee wages, and decreasing funding for social or welfare. The goal of austerity is to improve a government's financial health. 

There are three primary types of austerity measures: revenue generation (higher taxes) to fund spending, raising taxes while cutting nonessential government functions, and lowering taxes and government spending.

In July 2024, President William Ruto announced a raft of measures by his administration to cut down on government expenditure.