PwC has warned of a potential private sector credit crunch due to increased domestic borrowing in the 2025/26 budget proposed by Treasury Cabinet Secretary John Mbadi.

• Sh635 billion is budgeted for domestic borrowing, significantly impacting fiscal space.
• Peter Ngahu, Regional and Country Senior Partner for Eastern Africa at PwC, highlighted the risks of crowding out the private sector from credit markets.
• Projected recurrent expenditure will reach Sh3.13 trillion, surpassing ordinary revenue of Sh2.75 trillion, indicating a fiscal imbalance.

The Kenyan government, represented by Budget Cabinet Secretary Mbadi, has unveiled a Sh30 billion revenue plan for the 2025 budget without introducing new taxes, following public protests against the prior tax proposals.

• The 2025 Finance Bill aims to generate revenue through reforms and improved compliance rather than tax increases.
• Mbadi emphasized the need for fairness in the tax system, noting a significant rise in tax expenditures from Sh393.1 billion in 2022 to Sh510.6 billion in 2023.
• Customs measures include reduced duty rates on tea packaging materials and wheat, alongside tax incentives designed to support local industries and housing initiatives.