The Treasury has tabled the budget estimates for the year ending June 2027, offering a glimpse into President William Ruto’s strategy to win over voters by ramping up spending on roads and housing while easing tax pressure ahead of the 2027 General Election.
In the final full-year budget under the Kenya Kwanza administration, the government plans to spend Sh4.82 trillion, up from Sh4.7 trillion in the current financial year, signalling an expansionary fiscal stance despite mounting debt pressures.
The State is also keen not to impose new taxes or increase existing ones in this year’s budget proposals, apparently concerned about the possibility of sparking social unrest after deadly protests broke out in 2024 against the government’s measures to raise revenue.
More than 50 people were killed when the youth-led marches broke out in 2024, forcing President Ruto to abandon tax hikes worth Sh346 billion.
In the next financial year, the State is keen to avoid a repeat of the protests while seeking to calm voters ahead of the 2027 poll.
Spending push
At the heart of the spending plan is a deliberate shift toward infrastructure and housing – two sectors that offer highly visible and politically impactful projects.
The development expenditure has been nearly doubled to Sh840 billion from Sh482 billion, with the projects set to provide the private sector with the demand it requires for hiring and offering better pay.
The State Department for Roads has been allocated Sh176.9 billion for development, from Sh92.8 billion for the current year ending June.
This makes roads one of the biggest beneficiaries of capital spending, reflecting a push to expand connectivity across the country, particularly through low-volume seal roads that are cheaper and quicker to roll out in rural constituencies.
The housing sector has seen an equally dramatic surge, on the back of the housing levy.
The State Department for Housing and Urban Development has been allocated Sh138.3 billion, of which Sh132.7 billion is earmarked for development and Sh5.5 billion for recurrent spending.
Within this, Sh118.1 billion will go toward housing development and human settlement, while Sh19.7 billion is set aside for urban and metropolitan development.
The scale of the allocation marks a sharp increase from previous budgets, where the affordable housing programme absorbed about Sh18 billion, underscoring the government’s intent to accelerate construction and job creation in the run-up to the election.
The broader development push is reflected in total voted expenditure, which stands at Sh2.82 trillion, comprising Sh1.98 trillion in recurrent spending and Sh840.6 billion in development expenditure.
The size of the development budget signals a continued tilt toward infrastructure-led growth, with roads and housing taking centre stage.
Other infrastructure-linked sectors have also received significant allocations.
The State Department for Transport has been allocated Sh63.9 billion, including Sh56.9 billion for development, which is up from Sh5.3 billion.
The bulk of the billions will help in the extension of the standard gauge railway to western Kenya and the upgrade of the older rail in Nairobi, central Kenya and the Coast.
The State Department for Water and Sanitation will receive Sh56.5 billion, with Sh48.0 billion directed toward development projects. The State Department for Economic Planning has been allocated Sh66.5 billion, largely driven by Sh62.5 billion in development spending.
Election strategy
The emphasis on roads and housing points to a calculated election-year strategy. Roads, particularly low-volume seal roads, are highly visible and can be distributed across multiple constituencies, allowing the government to demonstrate progress at the grassroots.
Housing projects, on the other hand, offer employment opportunities while addressing urban housing shortages, making them attractive to both rural and urban voters.
At the same time, the government has signalled that it will be easing its tax stance, cutting its ordinary revenue target to about Sh2.9 trillion, down from earlier projections contained in the Budget Policy Statement 2026.
Treasury Cabinet Secretary John Mbadi recently said his ministry would prepare a Tax Laws (Amendment) Bill that would raise the threshold of untaxed income from Sh24,000 to Sh30,000 and have income falling between Sh30,000 and Sh50,000 taxed at 25 percent.
While that has not been achieved, the government has indicated that it will not make major changes.
The plan to ease the tax burden comes as the State seeks to placate the electorate in the last full fiscal year before the General Election of August 2027.
Borrowing risk
However, rather than reduce spending, the Treasury has widened its borrowing plans, pushing the fiscal deficit above Sh1.1 trillion.
Kenya’s borrowing gap has widened from Sh1.066 trillion, with the loans being funnelled into various development projects.
Dr Ruto, who is yet to complete a mega project of the magnitude of the SGR or the Nairobi Expressway launched by his predecessor Uhuru Kenyatta, has also indicated that the government will start the upgrading of the Nairobi-Nakuru-Mau Summit Highway into a dual carriageway toll road.
Read: Kenya plans more expressways to ease rising traffic
Both projects are expected to open up the Western region of the country, a vote-hunting region for President Ruto, who political analysts say will struggle to entice the populous Mount Kenya region that voted for him to the last man in the 2022 elections.
However, this has come at the cost of increased borrowing, with the fiscal deficit widening to above Sh1.1 trillion as the State seeks to sustain its spending plans.