The National Treasury has reported an overall budget absorption rate of 93.3 per cent for the 2025/26 financial year, even as Members of Parliament questioned the government over mounting pending bills, domestic borrowing and delays in settling suppliers.
The figures were presented by National Treasury Principal Secretary Dr Chris Kiptoo before the National Assembly Departmental Committee on Finance and National Planning, which began a four-day review of budget implementation by State Departments and Agencies in Machakos on Tuesday, October 27, 2026.
Committee Chairperson Kuria Kimani said the exercise would assess the implementation of government programmes and projects and establish the performance of departments under the committee’s oversight.
In his submission, Kiptoo reported that the Treasury spent Ksh118.64 billion against an approved budget of Ksh127.14 billion by the end of the financial year on June 30, 2026.
“Recurrent expenditure demonstrated strong performance with an absorption rate of 95.2 percent, totaling Kshs. 85,549.5 million against an approved estimate of Kshs. 89,872.7 million”, PS Kiptoo stated.
Development expenditure, meanwhile, recorded an absorption rate of 88.8 per cent, with Ksh33.09 billion spent out of the approved Ksh37.26 billion.
On revenue collection, the PS told the committee that the national government raised Ksh3.1988 trillion, including Appropriations-in-Aid (AIA), against a target of Ksh3.259 trillion. Ordinary revenue accounted for Ksh2.5884 trillion.
Despite missing its revenue target, the Treasury highlighted improvements in economic growth during the period under review. “Kenya’s real GDP growth improved to 5.3 percent in the first quarter of 2026, up from 4.9 percent during the corresponding period in 2025, supported by broad-based expansions in agriculture, manufacturing, real estate, and financial services”, the PS noted.
The department also reported progress in financial inclusion, digital government services and public health programmes.
Kiptoo said 1,495,865 informal sector workers had been enrolled in the voluntary pension scheme, exceeding the initial targets. The Treasury had also facilitated the onboarding of 22,042 government services onto the e-Citizen portal to improve access to public services.
In the health sector, the PS reported that 1.36 million adults and children had received antiretroviral therapy under the Global Fund Programme. He added that HIV testing and treatment coverage for tuberculosis patients had reached 100 per cent.
On public debt management, Kiptoo said the Treasury had published an External Public Debt Register and met all its public debt service obligations.
Despite the reported achievements, the PS identified several challenges affecting the implementation of the Treasury’s performance targets, including Kenya’s continued presence on the Financial Action Task Force (FATF) grey list.
He said vulnerabilities in the country’s anti-money laundering and counter-terrorism financing frameworks could undermine investor confidence and access to international financing.
Other challenges included low absorption of donor-funded projects, global geopolitical tensions, inflationary pressures, rising borrowing costs and growing public debt obligations.
“Total public and publicly guaranteed debt stock rose to Ksh13.01 trillion by June 2026, up from Ksh11.81 trillion the previous year”, he submitted.
“Consequently, external debt service obligations required substantial outflows amounting to Ksh716.1 billion, split between Ksh504.3 billion in principal repayments and Ksh211.8 billion in interest payments”, he added.
Reflecting on the financial year’s performance, Kiptoo said the economy had remained resilient despite fiscal pressures. “The FY 2025/26 performance reflects the continued resilience of the Kenyan economy, maintenance of macroeconomic stability, strengthening of domestic resource mobilization, and sustained efforts to manage public debt and fiscal pressures,” Dr. Kiptoo noted.
He urged the government to strengthen revenue collection, improve the absorption of development funds, control expenditure and accelerate the settlement of pending bills to maintain fiscal sustainability.
The committee members raised concerns over the accumulation of unpaid bills, warning that businesses that had supplied goods and services to government risked being affected by prolonged payment delays.
Kimani questioned when the outstanding obligations would be settled and what the delays meant for affected suppliers. “We have pending bills amounting to 475bn. What is the fate of those businesses that supplied goods and services to the government and when are they going to be paid?” Hon. Kuria asked.
Butula MP Joseph Oyula also criticised the increasing reliance on domestic borrowing, arguing that it could limit credit available to private businesses. “Domestic financing is rising every year. I thought we should be working to bring this figure down. I understand that it is better to borrow externally, especially if it is concessional. Something should be done to settle these pending bills,” Butula lawmaker Hon. Joseph Oyula stated.
Kesses MP Julius Rutto sought clarification on the outstanding bills owed by county governments, questioning why such obligations remained unpaid despite counties receiving funds from the national government.
“What is the status of pending Bills in County Governments so that we know what is the status of our pending bill as a country. After all, this is an obligation that we have to meet. If counties are still receiving disbursements on time, why not settle their pending bills?” Hon. CPA Julius Rutto asked.
In response, Kiptoo said the government had introduced measures to prevent further accumulation of pending bills, including adopting an accrual accounting system a year earlier. He added that the National Treasury had directed government entities to treat pending bills as a first charge on their budgets.
The PS told the committee that Ksh255 billion recommended for settlement after verification was being processed for payment. Of this amount, Ksh80 billion had already been settled through securitisation, while the remaining balance was expected to be cleared by the end of the year.
Kiptoo further disclosed that county governments had accumulated Ksh173 billion in pending bills, with Nairobi County accounting for half of the total.
The committee also examined the low absorption of funds allocated for subscriptions to international organisations, which stood at 65 per cent.
Chesumei MP Paul Biego questioned why the government continued to record low expenditure against the allocation year after year. “There is need to review the budget approved towards subscriptions because year after year, there is always a low recording on the item in the budget and now the under-absorption stands at 35 per cent. PS, what could be the challenge?” Hon. Biego asked.
Kiptoo explained that although the National Treasury was responsible for making the payments, the respective government agencies were required to submit invoices to facilitate the process. He attributed the shortfall in expenditure to delays by state agencies in forwarding the necessary invoices.
Members of the committee also sought assurances on measures being taken to protect the economy from potential financial shocks ahead of the next general election.
Kimani pointed to a recurring decline in economic growth during election periods and asked what the government was doing to prevent a similar trend in the coming year.
“PS, statistics show a dip in the GDP growth every election cycle. What measures is the State Department putting in place to ensure that this does not happen next year?” Hon. Kimani asked.
In his response, Kiptoo attributed the trend to reduced economic activity ahead of elections. He urged Kenyans to maintain peace and support free and fair elections, saying a stable political environment would help sustain economic growth.
