The country has yet again recorded a revenue shortfall in the financial year 2024/25, this time missing Ksh253 billion to reach its previous set target of Ksh2.508 billion for the financial year.  

As at the end of April 2025, the total revenue collection amounted to Ksh2.255 billion, a shortfall that the National Treasury Cabinet Secretary John Mbadi attributes to an underperformance in ordinary revenue.  

“The below target performance in total revenue was on account of a shortfall registered in the collection of ordinary revenue by Ksh195.3 billion in ministerial AIA of Ksh57.7 billion,” he said.  

Even though the government remains optimistic that it is going to raise the Ksh3.3 billion revenues in the coming financial year, 2025/26, such trends make the new projection appear overambitious.  

While presenting on the budget statement and the revenue collection measures for the financial year, Mbadi noted that they were going to rev up revenue collection measures while leveraging on technology with a special focus on VAT to achieve this projection.  

“The Finance Bill 2025 has neither proposed new taxes nor raised any tax rates. Instead, we have chosen to enhance tax revenue collection through administrative reforms by simplifying and streamlining tax laws to make them clearer and easier to implement, thereby improving taxpayer compliance,” he asserted.    

The consolidation was also echoed recently by the Kenya Revenue Authority (KRA), which stated that it will be banking on VAT collection.  

“Digital tax administration is not just about adopting technology; it is a structural reform. It’s about building a fairer, more transparent, and efficient tax system for all,” KRA’s Commissioner for Medium and Small Taxpayers, George Obell, highlighted.  

While revenue collection dipped, the total expenditure for this financial year, which ends in close to a weeks’ time, amounted to Ksh3.024 billion against a target of Ksh3.187 billion, reflecting a shortfall of Ksh163.1 billion.  

According to the National Treasury, the underperformance was marked by lower than target disbursements in development expenditure and transfers to county governments, which were Ksh99.6 billion and 79.6 billion, respectively.  

The national government recorded an additional expenditure of Ksh16.1 billion to stand at Ksh2.337 billion, up from Ksh2.321 billion.  

“The above target expenditure in recurrent category was mainly due to higher than targeted expenditures on domestic interest payment and operation and maintenance,” Mbadi stated.  

During the fiscal year, total deficit, including grants, on a cash basis, stood at Ksh797.7 billion, which is equivalent to 4.6 per cent of the gross domestic product (GDP).  The deficit was, however, financed by net foreign financing amounting to Ksh441.8 billion and net domestic financing of Ksh355.9 billion.  

To this effect, the government is now revising downwards the revenue projections for the financial year.  

“Considering revenue underperformance as at the end of April 2025, the ordinary revenue target has been reviewed downwards. Ordinary revenue is therefore projected at Ksh2.49 billion from Ksh2.58 billion in supplementary estimates no. II and AIA are projected at Ksh489 billion,” a statement submitted to parliament reads in part.