Kenya plans budget to boost revenue and avoid protests over new taxes

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    12/Jun/2025

  • Kenya’s new budget avoids tax hikes that triggered 2024 protests, focusing instead on widening the tax base and improving compliance

  • Finance Minister John Mbadi confirmed no new taxes will be introduced, as debt levels and funding needs remain high

  • Experts warn Kenya’s deficit cut target is overly ambitious and past issues with budget execution may hurt credibility

Kenya’s finance minister John Mbadi will present a high-stakes national budget on Thursday (June 13, 2025) designed to raise revenue without provoking the kind of mass protests that paralysed East Africa’s largest economy last year. The budget aims to tackle ballooning debt obligations while maintaining public calm and investor confidence.

The government faces a complex fiscal balancing act, with a total debt-to-GDP ratio near 66%, far exceeding the sustainable threshold of 55% set by international standards. At the same time, the country is still reeling from the economic and political fallout of the 2024 tax hike protests, which forced the Ruto administration to reverse planned tax increases worth 346 billion Kenyan shillings (about $2.7 billion).


No New Taxes This Time

In a shift from previous years, Finance Minister Mbadi told reporters on Wednesday (June 12, 2025) that the new budget does not include additional taxes.

“Kenyans cannot bear more tax,” he declared. “For the first time, we have not added taxes in the current finance bill as has been the case before.”

This announcement was intended to calm a wary public, still skeptical about the government’s ability to manage funds effectively and equitably. Public sentiment remains volatile, and the administration is under pressure to deliver services without deepening household burdens.


Shifting Focus to Compliance and Broader Base

Instead of introducing new levies, the government plans to widen the tax base, improve tax compliance, and cut public expenditure, according to John Kuria, a tax expert and partner at Kody Africa.

Kuria said that although the public mood is tense, there’s hope the strategy of increasing tax efficiency rather than tax levels could succeed.

“They understand that people are not very happy, especially with the government and how the taxes are being used,” Kuria said.


Controversy Over Surveillance Provisions

However, the draft finance bill has drawn criticism for allegedly attempting to expand the Kenya Revenue Authority’s powers to access bank accounts and mobile money transactions — a move some see as invasive and unconstitutional.

While the government insists these measures are necessary to curb tax evasion, civil rights groups argue they infringe on citizen privacy and could undermine public trust further.

Mbadi defended the move, stating that empowering the tax authority was essential to generate adequate revenue to fund national development.


Funding Gap Still Looms

Despite the promised spending cuts and better compliance, analysts remain sceptical about whether the budget will close Kenya’s fiscal gap.

“I think we’re still going to have a significant funding shortfall,” Kuria said.

According to Shani Smit-Lengton, Senior Economist at Oxford Economics Africa, the government’s implementation record is a bigger issue than the plan itself. Kenya often relies on supplementary budgets mid-year, which undermines fiscal credibility and deters long-term investment.

“The challenge lies in implementation, which Kenya has struggled with historically,” Smit-Lengton noted.


IMF Pressure and Debt Obligations

Kenya applied for a new International Monetary Fund (IMF) lending programme in March 2025, after opting out of the final review of its previous agreement. The country’s growing debt maturity profile forced it to seek external funds to pay off liabilities and maintain essential services like healthcare.

In February 2025, Kenya joined several African nations in accessing international markets to restructure debt and reduce budgetary stress.

Smit-Lengton warned that with public trust fragile and debt concerns growing, the government must demonstrate strict budget discipline to sustain investor confidence and ensure IMF support.


An Overambitious Deficit Target?

The government’s goal to reduce the fiscal deficit to 4.5% in FY 2025–26 has been labelled overly optimistic by experts.

“The government must strike a delicate balance — improve budget discipline to unlock IMF funds, and manage public sentiment to avoid unrest,” Smit-Lengton said.

Failure to meet this target could result in reduced international credibility, possible downgrades by rating agencies, and higher borrowing costs, further pressuring the already stretched public purse.


Conclusion

Kenya’s 2025 budget is a critical test of fiscal policy, political sensitivity, and economic management. With no new taxes announced, the government has chosen a cautious path to stabilise revenues, avoid protests, and maintain its fragile social contract.

But success will depend on realistic execution, institutional capacity, and transparent governance. With a looming funding shortfall and debt pressures mounting, Kenya’s room to manoeuvre is shrinking — and the eyes of citizens, creditors, and global observers are watching closely.

Would you like an infographic of Kenya’s 2025 budget highlights, a timeline of past protests and reversals, or an explainer on the IMF’s lending conditions?


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