Kenya’s economy is projected to expand by 4.8 percent in 2025, according to the Parliamentary Budget Office (PBO). The forecast is slightly lower than the National Treasury’s more optimistic outlook of 5.3 percent growth for the same year, up from an estimated 4.6 percent in 2024.
The projection was presented during the opening sessions of high-level stakeholder engagements convened by the Budget and Appropriations Committee, chaired by Alego Usonga MP Samuel Atandi. The discussions are focusing on the implementation of the 2024/25 budget, sectoral priorities for the 2025/26 budget, and key Senate Bills.
The PBO noted that Kenya’s growth will depend heavily on the effective rollout of the Bottom-up Economic Transformation Agenda (BETA) in agriculture, industry, and services. However, agriculture remains vulnerable to unpredictable weather conditions. The Treasury, on the other hand, expects stronger agricultural performance, supported by favorable weather and the development of priority value chains under BETA. Growth in the services sector is expected to be boosted by ICT investments and tourism, while the industrial sector is projected to benefit from lower production costs and value addition efforts.
Despite the positive outlook, the PBO warned of external risks that could slow down growth. It cited the global economic environment and possible spillover effects from protectionist trade policies, which may affect Kenya’s trade and financial flows. Even so, credit uptake is expected to rise, supported by ongoing monetary policy easing, which could spur private sector investment and economic activity.
The Committee was also briefed on the County Governments Additional Allocation Bill, 2025, which proposes an extra Sh93.53 billion for counties. The money is expected to come from sources such as court fines, mineral royalties, the Road Maintenance Levy Fund, and development partner loans and grants.
At the same time, the Equalization Fund Appropriation Bill, 2025, was presented to the Committee. It proposes Sh16.8 billion for 1,424 marginalized areas in the 2025/26 financial year. The funds include Sh6.2 billion carried forward from 2024/25 and Sh10.6 billion earmarked for the new financial year, part of which covers arrears. The Council of Governors is expected to give its input when the Bill comes up for further scrutiny later this week.
Other presentations to the Committee included updates on the fiscal framework, the 2024/25 budget implementation, and the financial performance of the Office of the Auditor General. In the coming days, the Committee will also engage the Controller of Budget, the Central Bank Governor, the Auditor General, the Council of Governors, the Office of the Deputy President, the Ministry of Transport and Infrastructure, and the National Treasury.
Email your news TIPS to Editor@Kahawatungu.com — this is our only official communication channel
