Treasury CS John Mbadi. Photo | courtesy.
The government has announced it will not seek funding from International Monetary Fund (IMF) to finance the budget deficit in the upcoming financial year.
The Finance Bill 2025, approved by the Cabinet, outlines a strategy to cap the fiscal deficit at 4.5 percent of GDP for the fiscal year 2025/26, a reduction from the previous year’s 5.1 percent.
The government aims to achieve this by enhancing tax compliance, closing revenue loopholes, and implementing austerity measures.
Finance Minister John Mbadi stated, “This budget reflects our commitment to fiscal discipline and reducing dependency on external debt. By focusing on domestic revenue mobilization and prudent expenditure, we are laying the groundwork for sustainable economic growth.”
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The exclusion of IMF loans comes after a period of strained relations with the lender. In March, the IMF halted the final review of $3.6 billion support program due to concerns over governance and fiscal management.
Subsequently, the Kenyan government withdrew a proposed $2.7 billion tax increase following widespread protests.
Finance Minister Mbadi emphasized the government’s focus on domestic solutions: “We are actively engaging with the public to identify innovative revenue-raising measures that align with our economic objectives and address the concerns of our citizens.”
The new budget also includes provisions for the Finance Bill 2025, which seeks to enhance financial efficiency and close tax loopholes. The government has indicated that it is open to public suggestions for new legislation to boost revenue.
Cabinet Secretary for Industry, Trade, and Cooperatives Betty Maina remarked, “The Finance Bill 2025 is a critical step towards strengthening our fiscal framework and ensuring that our economic policies are inclusive and transparent.”
