Thursday, 11th June 2026

Hon. Members, we have quorum. We can start our business.

Members on their feet, take your seats. Hon. Farah, where is your nearest seat? Member for Sirisia, take your seat.

Hon. Members, you recall that on Tuesday, 9th June 2026, I notified the House of the appointment of five Senators to the Mediation Committee on the Cooperatives Bill (National Assembly Bill No. 7 of 2024) . I wish to inform the House of the appointment of four additional Senators to the said Mediation Committee. They are:

Hon. Members, I have a Petition regarding the establishment of a National Police Firearms Digital Detection and Tracking System. Article 119 of the Constitution accords any person the right to petition Parliament to consider any matter within its authority. Further, Standing Order 225 (2) (b) requires the Speaker to report to the House any Petition other than those presented by a Member. In this regard, I wish to report that my Office has received a Petition from Mr Emmanuel Kelly Ojoo, Identification Card No.2607, calling for the establishment of a National Police Firearms Digital Detection and Tracking System.

While the Petition acknowledges the provisions of Articles 243 and 244 of the Constitution regarding the establishment and functions of the National Police Service, the

Petitioner is concerned that several security incidents, including attack on police posts and stations in some parts of the country, where officers are reportedly ambushed and firearms forcefully taken, exposes vulnerabilities in current firearms storage, monitoring and rapid response systeMs

The Petitioner contends that the theft or unauthorised removal of police firearms places police officers at heightened operational risk, endangers civilians and undermines public confidence in national security institutions. The Petitioner observes that the firearm issuance and armoury management systems in many police stations remain largely manual and lack immediate electronic detection mechanisms, capable of flagging unauthorised removal or tampering in real time. Further, the Petitioner notes that there is presently no mandatory nationwide encrypted and automated alert system that instantly notifies command structures upon irregular firearm movement, thereby delaying rapid response and recovery efforts.

The Petitioner, therefore, prays that the National Assembly intervenes to amend the National Police Service Act, the Firearms Act and related legislation to establish secure national digital firearms detection and tracking system within the National Police Service. This, the Petitioner asserts, must include biometric controlled smart armouries, encrypted real time tracking and alert mechanisms, safeguards for operational confidentiality, dedicated budgetary support and security protections to ensure officers are not unfairly held liable for systemic technological failures.

Having established that the matters raised in the Petition fall within the authority of this House, and that they are not pending before any court of law or constitutional body, I hereby commit the Petition to the Public Petitions Committee for consideration, pursuant to the Standing Orders of the House. The Committee is required to consider the Petition and report its findings to the House and the Petitioner, in accordance with Standing Order 227 (2). I thank you.

Hon. KJ?

Thank you, Hon. Speaker. Our Standing Orders allow for comments on petitions. What has been brought forward, though it goes to the Public Petitions Committee, involves the Committee led by Hon. Tongoyo. It speaks to some issues under the Departmental Committee on Communication, Information and Innovation. Today’s technology allows effective tracking and we must thank the Petitioner for bringing this matter before the House.

I wish to request that your office allows for some engagement with the Departmental Committee on Communication, Information and Innovation as well as with the Departmental Committee on Administration and Internal Security, led by Hon. Tongoyo, so that we may be able to contribute to this Petition.

Dagoretti South, having suffered the brunt of the theft of police equipment and attacks on police stations, it also has an interest in this Petition. We must thank the Petitioner, even as this matter goes to the Public Petitions Committee. It is a new world which requires us to make use of the available technology, even in public policing and security. We must, therefore, thank the Petitioner. I hope that my Committee and the one that is led by Hon. Tongoyo shall be involved in prosecuting it.

I thank you, Hon. Speaker.

Thank you. Hon. Milemba.

Thank you, Hon. Speaker. This Petition will expand the space of security, especially on the issue of firearm movement. As I thank the Petitioner, I note that he has opted to address one side of the issue, where police officers lose their firearms after being attacked, as illustrated by the examples he has already given.

However, there are situations where police officers illegally hire out firearms for criminal activities, something that has been raised on several occasions. I think it is a very good

Petition. Therefore, the Committees that have been given the opportunity to consider it, should be careful to develop it in such a way that it results in legislation that can digitize the movement of firearms from police stations, police posts and any other places where firearms are kept. This will go a long way in ensuring that firearms remain in the hands of the correct persons and can be tracked any time.

Hon. Speaker, yesterday I was at Kenyatta National Hospital and I noticed that they have digitised everything. They can track financial transactions, movement of patients and every other operation. This is an area where the Ministry of Interior and National Administration can leverage technology to ensure that we can track the movement of firearms and even ammunition. That will save us a great deal of trouble.

Thank you, Hon. Speaker.

Order, Hon. Members. I agree with Hon. KJ and Hon. Milemba. Leader of the Majority Party, kindly look into this Petition. I direct that you find a way of fusing the Departmental Committee on Communication, Information and Innovation, the Departmental Committee on Administration and Internal Affairs and the Public Petitions Committee to look at it and see how they can engineer some legislation. It makes a lot of sense.

Next Order.

Chairperson, Committee on Members’ Services and Facilities.

Thank you, Hon. Speaker. I beg to lay the following Paper on the Table:

Report of the Committee on Members’ Services and Facilities on its inspection visits to constituency offices in Nakuru County.

Thank you. Next Order.

Hon. Wachira Karani, Chairperson of the Committee on Members’ Services and Facilities. Proceed.

Hon. Speaker, I beg to give notice of the following Motion:

THAT, this House adopts the Report of the Committee on Members’ Services and Facilities on inspection visits in constituency offices in Nakuru County, laid on the Table of the House on Thursday, 11th June 2026.

Thank you. Next Order.

Thank you, Hon. Speaker. This is the usual Thursday Statement on behalf of the House Business Committee. Pursuant to the provisions of Standing Order 44 (2) (a) , I rise to present the following Statement. The House Business Committee met on Tuesday, 9th June 2026 to prioritize business for consideration during the week and the business coming before the House in the following week.

Hon. Speaker, as Members may have noticed from the Order Paper today, the House Business Committee approved light business for the Sitting. This is intended to allow the Cabinet Secretary for the National Treasury and Economic Planning, Hon. F.C.P.A., John Mbadi E.G.H., to make a public pronouncement of the Budget Highlights and revenue-raising measures for the National Government for the Financial Year 2026/2027, commencing at

Hon. Speaker, if you can protect me from the ‘Impeacher’.

Order.

Is that the Member for Gatundu South?

Thank you, Hon. Speaker. The consultations were too loud and they were coming from the corner where Hon. Mwengi Mutuse is seated. When there are Cabinet Secretaries in the House, you never know what Hon. Mwengi Mutuse could be planning.

Let us have Hon. Junet. Take one or two minutes.

Thank you, Hon. Speaker. I wish to add my voice to what the Leader of the Majority Party has said. I know we are in an era of misinformation and disinformation, but when that misinformation comes from high-level members of society, some of whom have been speakers of this House, it becomes worrying. I heard the former Speaker say that this is the first time a budget is being presented when the President is not around. The last President to be present in this House during the Budget presentation was President Mwai Kibaki, under the old Constitution. It appears that those

people do not know what is happening in the country. They have no agenda to sell to Kenyans and so, they are scavenging for anything. Even the President's travels have become a problem for them. The Cabinet Secretary for the National Treasury and Economic Planning will come to the House to issue the statement, not the President.

Secondly, they have spoken about the Finance Bill. First, they claimed that the Bill contained a clause converting all freehold titles into leasehold titles. That lie has since been demystified and so, they have nothing else to say.

Lastly, I want to remind the House and Kenyans that the former Chairman of the Orange Democratic Movement (ODM) will be presenting the Budget highlights today. Can you repeat after me? ODM!

ODM!

Thank you very much.

Order, Hon. Members. Hon. Junet, you are out of order for conducting an illegal choir on the Floor of the House.

Members on their feet, take your seats. Hon. Keynan, take your seat.

Go ahead,

Hon. Speaker, on behalf of the Chairperson of the Departmental Committee on Agriculture and Livestock, I beg to move that the Agricultural and Livestock Extension Services Bill, (Senate Bill No. 12 of 2022) , be now read a Third Time. I request Hon. Susan Ngugi to second.

Let us have Hon. Susan.

Hon. Speaker, I second.

Members on their feet, take your seats. Hon. Nzengu, take your seat.

Do I put the question?

Yes.

Leader of the Majority Party, it is now 3.00 O’clock. Will you search, find and bring to the Chamber the Cabinet Secretary for the National Treasury and Economic Planning?

Power! Power!

Order! Leader of the Majority Party.

Hon. Speaker, as you have directed, I did not have to search for the Cabinet Secretary. He was well within the precincts of Parliament, and on time. It is now my pleasure and honour to present to the House, to the country and to you, Hon. Speaker, the Cabinet Secretary for the National Treasury and Economic Planning, Fellow of the Certified Public Accountants of Kenya (FCPA) , Hon. John Mbadi, the expert.

Hold on, Cabinet Secretary. Take your seat.

Members and guests in the Galleries, be upstanding.

The Cabinet Secretary for National Treasury

: Thank you very much.

Jowi! Jowi!

The Cabinet Secretary for National Treasury (Hon. John Mbadi): Hon. Speaker, the Rt. Hon. Raila Amolo Odinga was a key partner to His Excellency President (Dr) William Samoei Ruto, in the Broad-Based Arrangement. This Budget captures the ideals of the two great leaders, especially on the aspiration to transform our economy from its current status to a more developed nation status, a path to Cannan through Singapore. The extensive public participation throughout the Budget process presents a solid basis and foundation for what is clearly the ‘People’s Budget’.

Public participation is a constitutional imperative. In compliance with this requirement, I personally led extensive public engagements with Kenyans from across the country in the last one year. This was meant to get their views and inputs to the Budget that I am presenting today. For example, I met youth and the business community, particularly bodaboda operators, jua kali artisans, leadership of the mitumba sector and scrap metal dealers. I also engaged extensively with members of the fourth estate, and in the process, launched their Financial Journalists Association. Additionally, I travelled to various regions and conducted numerous regional dialogues. Those include Kilifi in December 2025 for the Coastal Region Dialogue; Migori in Nyanza; Kakamega in Western; Eldoret and Nakuru in Rift Valley regions in January

of public resources and decisively deal with corruption. Among the concerns and anxieties raised by Kenyans is the fear of potential outbreaks of infectious diseases, including Ebola, given the reported cases in some countries within the region. I wish to underscore that while Kenya is currently free of any confirmed Ebola Virus Disease, the Government has activated the National Ebola Incident Management System to coordinate surveillance and response. Already, enhanced screening is taking place at all the points of entry, especially the airports and border points. The Government has, in the meantime, trained over 1,000 healthcare workers and put together a reserve team of 241 experts in epidemiology, laboratory services and emergency response who remain on standby for rapid deployment. The Government has also designated isolation and treatment facilities across the country, including at Kenyatta National Hospital and the National Police Service Hospital. The Ministry of Health is working closely with regional and international partners, including the World Health Organization, Africa Centre for Disease Control and Prevention (CDC), Inter-governmental Authority on Development (IGAD) and the East African Community on this matter. These efforts are further supported by our development partners.

Already, the Government of the United States of America has committed approximately US$13.5 million towards health security interventions including disease surveillance and emergency preparedness. In addition, the World Bank has mobilised resources under the Regional Recovery and Resilience Operation Programme, which will support, among others, interventions in strengthening the health systems. Those resources, complemented by domestic budgetary allocations, will significantly enhance Kenya’s capability and capacity to prevent, detect and respond to Ebola and other epidemic-prone diseases, while safeguarding livelihoods and maintaining economic stability.

Hon. Speaker and Hon. Members, this demonstrates that this Government is listening and responding to the concerns of citizens. On other concerns that Kenyans raised with me during the public engagements that I highlighted above, I will be elaborating on interventions that the Government is putting in place to cushion Kenyans and improve their livelihoods.

Hon. Speaker, the Budget for Financial Year 2026/2027 will prioritise various interventions under the Bottom-Up Economic Transformation Agenda (BETA) that promote private sector-led growth, expand employment opportunities and enhance delivery of public services, while preserving fiscal sustainability and building resilience against emerging economic challenges. This Budget is being presented at a time of heightened global uncertainty arising from the ongoing conflict in the Middle East. The conflict has disrupted global commodity markets and supply chains, weakened investor confidence and tightened financial conditions. Those developments have heightened risks to growth and inflation, increased pressure on public finances and created uncertainty in global markets.

For a developing economy such as Kenya, the impact is being felt through higher pump prices following a steep increase in global oil prices from an average of US$63.06 per barrel in February 2026 to US$94.4 per barrel by the end of May 2026. In addition, tighter financing conditions, weakening export demand, slower investment flow and rising cost of living, continue to exert pressure on economic activities. Yet, even in this environment, new opportunities are emerging. Countries that strengthen competitiveness, deepen regional integration and build resilient productive capacity, will be the ones that will thrive.

It is against this backdrop that Kenya’s economic journey over the past three years stands as a story of resilience. Difficult but necessary choices were made, delivering a steady recovery. Faced with significant domestic and external pressures and shocks, the Government took difficult but necessary decisions to restore macro-economic stability, strengthen public finances and lay a firm foundation for sustainable growth. The hard decisions are bearing fruits. Under BETA, we have recorded clear gains. First, the Kenyan economy has remained resilient

and registered an average growth rate of 5 per cent in the period of 2022 to 2025, outperforming the average global growth rate of 3.4 per cent and that of Sub-Saharan Africa of 4.1per cent.

Importantly, macro-economic stability has been preserved, confidence in our economy has actually strengthened and the foundations for sustained growth are now firmly in place. Macro-economic fundamentals such as inflation and exchange rates have strongly rebounded, and are projected to remain stable. Interest rates have declined, supporting growth in private sector credit from the banking industry. We have also accumulated the highest levels of official foreign exchange reserves of US$13.2 billion, which is equivalent to 5.6 months of import cover by May 2026, providing adequate cover and a buffer against short term domestic and external shocks.

Hon. Speaker, let me mention some of the key achievements. Since the roll-out of the Bottom-Up Economic Transformation Agenda (BETA), the agriculture sector has registered key gains, including reduced fertiliser costs through Government subsidy programmes, increased marketed agricultural production, expanded food security interventions and strengthened farmer support services targeting both small-holder and commercial farmers. Specifically, fertiliser disbursements under the Fertiliser Subsidy Programme increased substantially to 21.3 million bags in 2025 from 1.4 million bags in 2022.

national sugar production rising to 815,454 metric tonnes in 2024 from 472,773 metric tonnes in 2022. Having spoken about agriculture, and you can see the kind of improvement that has taken place in agriculture, let me turn to healthcare.

Access to healthcare has expanded substantially through far-reaching reforms aimed at strengthening primary healthcare, improving service delivery, and ensuring sustainable health financing. A total of 31.2 million Kenyans are now registered under the Social Health Authority (SHA), compared to about 8 million under the defunct National Health Insurance Fund (NHIF), while 228 primary care networks have been established and operationalised. A total of 107,831 Community Health Promoters (CHPs) have been recruited and trained, while 16,810 medical interns have completed their internships, bringing healthcare services closer to communities.

The Government recognises the critical role that contracted healthcare facilities play in the delivery of healthcare services to Kenyans. It is with this in mind that the Government, in the current 2025/2026 Financial Year, has allocated Ksh4 billion for the settlement of outstanding NHIF pending bills. Going forward, we will settle the balance of the bills owed under the defunct NHIF, which spans over the years. This allocation is specifically designated for the settlement of NHIF pending bills that are owed to contracted healthcare facilities, in accordance with the Presidential Directive prioritising the clearance of outstanding obligations for facilities with claims not exceeding Ksh10 million. The claims earmarked for settlement under this allocation have been duly verified and adjudicated and will be fully paid before the close of this financial year. The Government will subsequently prioritise payment of outstanding claims exceeding the Ksh10 million threshold once they have been verified in the next Budget.

The Government has accelerated the implementation of the Affordable Housing Programme to address Kenya's housing deficit, create jobs, stimulate local manufacturing, support Micro, Small, and Medium Enterprises (MSMEs), strengthen county economies, and improve the quality of life of millions of Kenyans. Through the programme, a total of 277,281 housing units have been completed or are under implementation nationwide as of May 2026. The programme has also successfully aggregated demand through the Boma Yangu platform, where more than one million Kenyans have registered their interest in home ownership, demonstrating the scale of housing demand and growing public confidence in the Government’s housing agenda, and I hope they will not listen to other voices out there.

To improve living conditions for students and support the expansion of higher education, the Government has packaged 177,686 student beds for development across universities, while 22,512 institutional housing units are under construction for our disciplined forces, teachers, healthcare workers, and other public servants. The programme has also created over 640,442 jobs across the housing value chain through construction activities, professional services, manufacturing, logistics, and supporting industries. Those are Kenyans who would otherwise be jobless if we did not have the Affordable Housing Programme.

Development Fund. Additionally, 91,253 youth have benefited from start-up grants under the National Youth Opportunities Towards Advancement (NYOTA) Programme. The NYOTA programme has also supported 51,604 youth through on-the-job experience in 26 counties across the country.

Thirdly, the Government has also implemented the Vijana Vuka na Afya (VIVA) Project in Nairobi, Kisumu and Mombasa, where 72,623 youths have benefited from subsidised sexual reproductive health services.

In support of the creative economy, the Government has established three film hubs at Dedan Kimathi University in Nyeri, as well as in Bomet and Migori counties, and fully equipped them with film production equipment. Additionally, a cinema theatre has been established at Dedan Kimathi University of Technology with an audience capacity of 150. Further, to reach more youth, particularly in rural areas, a Cinema Mashinani Programme has been rolled out. The Government has also facilitated the production of 1,745 local and foreign films in Kenya and trained 1,847 film-makers.

To further empower the youth, the Government, in partnership with the United Nations Development Programme (UNDP), has developed the NextGen.ke initiative, which will provide recently graduated youth with paid internship opportunities in the private sector, thus enabling them to acquire practical workplace experience and market-relevant skills. I personally led the negotiation on this score. To support this intervention, the Government has committed an initial allocation of Ksh2 billion towards its implementation.

Given the scale of the youth employment challenge, the Government further calls upon development partners, the private sector, philanthropic organisations, and other stakeholders to join this national effort, acknowledging that the task of creating opportunities for Kenya's youth extends beyond the capacity of Government alone, and requires a broad-based partnership for sustainable impact.

Hon. Speaker and Hon. Members, to support micro, small and medium enterprises (MSMEs), the Government has deliberately moved to place affordable credit, markets, and shared infrastructure directly into the hands of enterprises and young people at the base of the economy. To expand access to affordable credit, the Government set up the Hustler Fund in

Kabarnet, Kitui - Wote, and Sondu - Homa Bay lines. In addition, 330 kilometres of distribution lines and seven associated sub-stations were completed. During the same period, access to electricity expanded significantly, with the number of connected customers rising from

environment and the need for continued prudence in the management of public resources. The current fiscal position that is characterized by narrowing fiscal space calls for careful prioritization and disciplined execution of Government programmes.

Let me speak plainly about the fiscal reality we face. Kenya's infrastructure financing deficit stands at approximately US$5 billion every year. That is about Ksh650 billion. Our development budget, while growing, cannot close that gap alone. The era of financing every road, every power line, and every dam through Government borrowing and taxation is over, not because we lack ambition, but because we have learnt from the consequences of that model. Debt-financed infrastructure has left us with more debt service obligations that crowd out the very spending our people need most, on health, education and social protection.

So, we are going to build better. We are shifting from a model where Government borrows to build, to enhanced use of the Public-Private Partnerships and the recently established National Infrastructure Fund in funding priority infrastructure through private sector finances. That is the foundation on which this Government’s infrastructure programme rests. The Rironi - Nakuru - Mau Summit Expressway stands as proof. Construction of the Expressway is now underway and Kenyans will be driving on a modern, four-to-six-lane expressway once it is completed.

Risks remain, though. Domestically, climate-related shocks could disrupt agricultural production and infrastructure, while externally geopolitical tensions, commodity price volatility, weaker global growth, and tighter financial conditions continue to adversely affect inflation, exports, and capital flows. The Government will continue to monitor the evolution of these risks closely and deploy timely policy interventions to safeguard stability, strengthen resilience, and sustain inclusive economic growth.

Hon. Speaker, I will now turn to the policy priorities and strategic interventions that will underpin the Budget for Financial Year 2026-2027. Policy priorities and structural reforms It will be anchored on a Bottom-Up Economic Transformation Agenda (BETA). The economic context I have outlined is a clear reminder that we are operating in a period that demands resolve, discipline, and decisive actions. The convergence of global shocks and domestic pressures calls not only for incremental adjustments, but for bold and well-coordinated policy responses. In this regard, the Government has taken and will continue to take firm and, where necessary, decisive actions to consolidate recent gains, safeguard macro-economic stability, protect livelihoods, and strengthen economic transformation.

Our focus is not only on navigating the immediate challenges, but also on accelerating structural transformation, creating jobs at scale, and ensuring that the benefits of growth are broadly shared among all Kenyans. These interventions are being implemented within a coherent and forward-looking framework anchored on the Bottom-up Economic Transformation Agenda. BETA remains the Government's principal vehicle for translating policy into tangible outcomes and at the household level by aligning investments, reforms, and institutions around the goal of inclusive growth and shared prosperity.

Through the Bottom-Up Economic Transformation Agenda's five core priority pillars, the Government is scaling targeted interventions that address binding constraints to productivity, expand economic opportunities, and strengthen resilience across sectors. These priority pillars are deliberately structured to reinforce one another, ensuring that progress in one area catalyses gains across the broader economy.

The Government also continues to implement complementary cross-cutting policy interventions to sustain economic resilience, accelerate inclusive growth, and improve the business environment. These will create a seamless transition to the next frontier of economic transformation. These interventions include the following:

attract private capital and expertise, while supporting infrastructure development and improved service delivery.

Let me speak to digital signatures in Government. Hon. Speaker, in line with the Digital Transformation Agenda, the Government has also embarked on reforms to modernise and harmonise the legal and regulatory framework governing secure digital identities, electronic signatures, electronic seals and time-stamping services. To make this a reality, I will, in the next Financial Year, submit to this House the necessary amendments to the Public Finance Management Act and Kenya Information and Communications Act, as well as the attendant regulations. This will make use of electronic signatures, electronic seals and time-stamping services a reality in Government, thereby creating efficiency in service delivery.

shilling overnight inter-bank average to enhance transparency and fairness in loan pricing and strengthen monetary policy transmission and number four, implementation of the Banking Penalties Regulations 2025 to strengthen enforcement, governance, accountability and compliance in the banking sector.

Hon. Speaker, to strengthen banking sector's resilience and stability, the Business Laws (Amendment) Act of 2024 requires commercial banks to progressively raise the minimum core capital from Ksh1 billion to Ksh10 billion by 2029 through targeted milestones. While the Government firmly upholds the strategic necessity of raising the minimum core-capital, it is prudent that this transition be managed in a manner that is least disruptive to credit access and financial services delivery, particularly to the micro, small and medium enterprise segment and other niche markets that are currently served by the banking industry. To allow flexibility in achieving this objective and following wide consultations, especially with the Kenya Bankers Association, I will be proposing amendments to the timeline specified in the Business Laws (Amendment) Act of 2024 to allow commercial banks to raise the minimum core-capital to Ksh10 billion by 31st December 2032, without their new annual milestones. This will provide the flexibility necessary for institutions to pursue measured, commercially sound and market-sensitive capital raising strategies in a manner that preserves shareholder value and sustains investor confidence.

To make it easy and cheaper for Kenyans and businesses to send and receive money across the East Africa region, partner states are working to connect their financial system as per the East African Community Payment System Master Plan of 2025, so that transactions are faster, more affordable and more efficient to support trade and regional integration.

To safeguard the country against illicit financial flows, the Government has, over the last two years undertaken far-reaching reforms aimed at strengthening our anti-money laundering, counter-financing of terrorism and counter-proliferation financing framework, following the country's placement on the Financial Action Task Force Grey List in February

The implemented Treasury Single Account model directly links invoices to specific budgets submitted by ministries and departments, among other enhanced features. These Treasury Single Account reforms have substantially improved the efficiency of Government exchequer operations, delivered transparency in exchequer and cash management, and ensured that public funds are released only against verified and approved obligations, thus laying the foundation for managing pending bills. There is going to be no more cherry-picking of invoices for payment.

Building on this momentum in Financial Year 2026/2027, the Government will extend the Treasury Single Account framework to county governments by completing the automation of county exchequer requisition processes, after which counties will progressively migrate to a Treasury Single Account architecture mirroring that of the national Government.

Two, it will operationalise, in collaboration with the Central Bank of Kenya (CBK), a Granular Data Integration System to deliver real-time visibility of the cash and liquidity positions of State corporations and Semi-autonomous Government Agencies. Hon. Speaker, taken together, these reforms represent a significant modernisation of our public cash management architecture. They are already delivering measurable savings, deepening fiscal transparency and strengthening our capacity to deliver value for every shilling of public money.

Let me now talk about strengthening Internal Oversight and Audit, and Fiscal Discipline. Every shilling entrusted to the Government must be accounted for and deliver value to the people of Kenya. The recurrence of audit queries and delays in implementing audit recommendations across public institutions continues to expose public resources to fiscal risk and weaken service delivery.

To strengthen accountability and fiscal discipline, and to support the Government’s Zero-Fault Audit Initiative, the Government will introduce amendments to the Public Finance Management Act and related regulations to strengthen the mandate of the Office of the Internal Auditor-General and enhance oversight across the public sector. We are strengthening the Office of the Internal Audit. The reforms will establish a framework for tracking the implementation of audit recommendations and resolutions issued by Parliament, the Office of the Auditor General, Audit Committees and other oversight institutions with clear accountability mechanisms for non-compliance.

The Government will also strengthen internal audit functions across public entities, roll out integrated internal audit management systems and enhance the adoption of enterprise risk management to improve the identification and mitigation of fiscal and operational risk. These reforms will strengthen transparency, internal controls and prudent management of public resources, while improving accountability and service delivery across the Government.

Let me now turn to revenue projections for the Financial Year 2026/2027. Our fiscal projections reflect a careful balance between ambition and realism, ensuring that we live within our means, while investing in our future. Based on the outlined policy measures, total revenue collection, including Appropriations-in-Aid for the Financial Year 2026/2027, is projected at Ksh3,630.5 billion, which is equivalent to 17.4 per cent of our GDP.

Of this, ordinary revenue is projected at Ksh2,985.7 billion, which is equivalent to

Our pension funds, insurance companies, SACCOs and retail investors will increasingly have the opportunity to participate in strategic national investments, ensuring that the benefits and returns generated by those projects accrue to Kenyan citizens while supporting long-term economic transformation. By mobilising domestic savings and channelling them into productive investments, we are creating a model of growth owned, financed, and sustained by Kenyans. Kenya is not just open for business. Kenya is investing in itself.

Now, let me turn to resource allocations. Over the past three years, we have laid a firm foundation for inclusive growth. The Financial Year 2026/27 Budget builds on those gains and advances BETA, the Administration’s core economic strategy aligned with the Fourth Medium Term Plan of Vision 2030. BETA focuses on public resources, unlocking productivity and increasing incomes at the base of the economy through deliberate, value-chain-driven allocations, even with limited fiscal space. This budget prioritises interventions that deliver the greatest impact in job creation, higher household incomes, and broader economic participation.

Agricultural transformation and inclusive growth are the first pillar. Agriculture remains central to BETA and Kenya’s long-term prosperity. It supports more than two-thirds of Kenyan households and generates significant employment multiplier effects, especially among groups that are historically excluded from modern economic opportunities. Strengthening agriculture is, therefore, essential for food and nutrition security, enhancing resilience, and promoting a shared prosperity.

To accelerate agricultural transformation, bearing in mind that agriculture is largely devolved, I propose a targeted allocation of Ksh64 billion across priority programmes that boost productivity, value addition and resilience. Key investments include Ksh18 billion for the fertiliser subsidy programme; Ksh2 billion for the seed subsidy programme, Ksh1 billion for the coffee seedlings programme to lower input costs for small-holders; Ksh4.7 billion for the National Agricultural Value Chain Development Project to advance processing and market linkages. Further, I propose Ksh5.4 billion for the Food System Resilience Project and Ksh1.6 billion for the Resilience for Food and Nutrition Security Programme to enhance adaptive livelihoods, diversify income sources and reduce vulnerability to climate shocks.

Recognising the economic potential of pastoral and livestock systems, I propose Ksh3.3 billion for the de-risking, inclusion and value enhancement of pastoral economies programme; Ksh1.3 billion for the Kenya Livestock Commercialisation Programme and Ksh400 million for the Livestock Value Chain Support Project. These allocations will foster greater market access, commercialisation, animal health services and resilience among pastoral communities.

The blue economy offers meaningful opportunities for coastal and lakeside communities. To support the growth of the blue economy and the fisheries sub-sector, I propose Ksh8.2 billion, including Ksh2.1 billion for the Aquaculture Business Development Project, Ksh1.8 billion for the Kenya Marine Fisheries and Socio-economic Development Project, and Ksh578 million for the Carbonium Fisheries and Aquaculture Training Centre. These investments will expand sustainable aquaculture, uplift fisher folks' incomes, and create jobs in value addition and logistics.

Addressing historical land inequalities remains a priority for this Government. To promote equitable access and ensure sustainable land management, I am proposing Ksh9.4 billion to settle the landless. Of this amount, Ksh5 billion is for the landless in the Coast region; Ksh892 million for the processing and registration of title deeds; and Ksh388 million for the digitisation of land registries to secure tenure, reduce disputes and unlock productive land use.

Let me turn to the second pillar that is transforming the Micro, Small and Medium Enterprises (MSME) economy. MSMEs are the backbone of our economy. They account for 98 per cent of businesses, provide approximately 14.9 million jobs and contribute about 40 per cent to our GDP.

They span from informal home-based enterprises to artisans, mechanics, tailors, carpenters, and fabricators, and to medium-sized firms. Nurturing those sectors is essential for broad-based job creation and inclusive growth. Lack of affordable credit remains a major constraint for MSMEs and households at the bottom of the pyramid. To address this, I propose Ksh550 million for the Centre for Entrepreneurship Project to strengthen incubation, skills and business development services, and Ksh1.1 billion for Rural Kenya Financial Inclusion Facility to expand credit access and financial services to under-served communities.

Housing and settlement are the third pillar. Decent housing underpins social stability and economic productivity. Our affordable housing programme not only provides safe and affordable homes to Kenyans, but also generates jobs directly in construction and indirectly across the building and services sectors.

To sustain this momentum, I propose Ksh143.7 billion for the housing sector, urban development and public works sub-sectors. This package will include Ksh18.6 billion under the Kenya Urban Programme, Ksh50.6 billion for the construction of affordable housing units, Ksh20.9 billion for social housing units, Ksh20.2 billion for institutional housing and Ksh18.2 billion for critical social and physical infrastructure. Further support will include Ksh2.7 billion for the Kenya Informal Settlements Improvement Project Phase II and Ksh535 million targeted to support the construction of the county headquarters. These investments will improve living conditions, service provision and local governance capacity.

To protect lives and property through compliance with building codes and standards, I propose Ksh2.4 billion for the regulation and development of the construction industry, thus reinforcing safety, quality and accountability across the sector.

Allow me to turn to the other pillar: Universal Health Coverage (UHC). UHC is central to BETA’s social contract. Equitable access to quality health services is essential for human capital, productivity and poverty reduction. Towards this end, I have proposed Ksh177.2 billion for the health sector to advance UHC and strengthen essential services. Key allocations include Ksh8.6 billion for UHC staff salaries and Ksh19.1 billion for the Primary Healthcare Fund to finance frontline services.

To reduce the burden of communicable diseases and advance immunisation, I propose Ksh18.5 billion for the Global Fund and Ksh6.4 billion for the Vaccines and Immunisation Programme. These investments will protect children and communities and reduce health-related economic shocks.

Tackling cancer and other chronic illnesses requires focused investments. I propose Ksh3 billion to the Emergencies, Chronic and Critical Illness Fund, Ksh1 billion for the construction of a Cancer Centre at Kisii Level 5 Hospital, Ksh300 million to strengthen cancer management at Kenyatta National Hospital, and Ksh150 million for the expansion of the Comprehensive Cancer Centre at Kenyatta University Teaching, Referral and Research Hospital. These measures will expand diagnostic and treatment capacity across regions, given that we are the leading hub in terms of health in this region.

To improve tertiary healthcare, I propose Ksh45.3 billion for our referral hospitals. Additional targeted investments include Ksh470 million for the construction of the Kenyatta National Hospital Burns and Paediatrics Centre, Ksh300 million for renovations and replacement of obsolete equipment at Kenyatta National Hospital, and Ksh2 billion for the construction of a new 2,000-bed multi-speciality facility at Moi Teaching and Referral Hospital to expand capacity and improve health outcomes.

To ensure reliable supply chains and strengthen human resources, I propose Ksh20.9 billion for the Kenya Medical Supplies Agency (KEMSA), Ksh3.1 billion for the Kenya Medical Research Institute (KEMRI), Ksh1.3 billion for the Integrated Reproductive Health Programme, Ksh500 million for family planning and reproductive health commodities, and Ksh600 million for equipment at the National Blood Transfusion Services.

As a country, we value the services offered by our health workers. To build workforce capacity, I propose Ksh9.3 billion for medical interns, Ksh10.9 billion for the Kenya Medical Training Colleges, and Ksh3.2 billion and Ksh396 million for stipends and medical insurance for Community Health Promoters, respectively.

Beyond healthcare, digital transformation remains a strategic enabler of competitiveness in the Fourth Industrial Revolution. Digital connectivity and literacy are essential for education, healthcare, finance, markets, public services and emerging digital opportunities. Kenya's creative economy—encompassing film, music, fashion, arts, media, digital content and design—has become a powerful engine of growth and youth employment. Investing in creative industries expands cultural exports and drives innovation.

To accelerate digital adoption and inclusion, I propose Ksh8.6 billion for this sector. This includes Ksh4.3 billion for the Kenya Digital Economy Acceleration Project, Ksh1.3 billion for the maintenance and rehabilitation of the National Optic Fibre Backbone Infrastructure, Ksh528 million for the maintenance and rehabilitation of Last-Mile County Connectivity, Ksh309 million for Government Shared Services, Ksh382 million for Digital Superhighway cybersecurity, Ksh400 million for the establishment of digital hubs and Ksh455 million for ICT infrastructure maintenance.

Now, let me move to investing in infrastructure. Infrastructure is the backbone of economic transformation. It provides connectivity, energy and water resources that are needed to power productive activities and sustain human settlement. By reducing transaction costs and opening markets, infrastructure investments deliver long-term value. Towards this end, I propose Ksh220.4 billion for road development, including Ksh44.3 billion for road construction and bridges, Ksh58 billion for road rehabilitation, and Ksh118.1 billion for road maintenance. This balanced mix supports connectivity, freight, efficiency and long-term road preservation.

To expand railway transport, I propose allocating Ksh38.4 billion to railway projects. Additionally, Ksh400 million is proposed for the Kenya Ferry Ramp in Likoni, Mombasa; Ksh1 billion for development of Public Ferry Landing Ramps in Lake Victoria, including Mbita and Sena Islands in Suba North and West sub-counties of Homa Bay County respectively; Ksh150 million for acquisition of a public ferry in Lake Victoria, thus completing the purchase of a public ferry for use in Lake Victoria; and Ksh582 million for Nairobi Bus Rapid Transport Project which is a critical public transport investment that will reduce congestion and enhance mobility.

Reliable and affordable energy is vital for industry and households. I propose Ksh30.9 billion for the energy sub-sector, including Ksh7.5 billion for the national grid system, Ksh20.2 billion for rural electrification, and Ksh3.2 billion for alternative energy technologies. These allocations expand access, lower costs and promote sustainable growth. I wish to add that many energy projects will be financed through the National Infrastructure Funds because they are commercially viable.

I now want to turn to improving education outcomes.

Yes! Tell us! The Cabinet Secretary for National Treasury

: Hon. Speaker, Kenya’s future depends on developing strong human capital. To this end, we will continue to strengthen quality learning, training and research, promote equity and inclusivity, scale up

investment in education, fortify the system against emerging technological and labour-market shifts, and strengthen education-industry linkages, thus ensuring skills match demand.

I propose Ksh784.5 billion for the education sector. A lot has been said about de-funding education. In the 2026/2027 Financial Year, we are proposing Ksh784.5 billion, which is 26.4 per cent of the Ministerial budget. Compare that to the 2021/2022 Budget before this Administration came into office. The education budget was Ksh526 billion. That has now increased by 49 per cent.

I have also proposed Ksh3.9 billion in stipends for village elders for the first time, a matter that has been discussed for years.

Ksh10.3 billion for the Equalisation Fund to finance programmes in marginalised areas and Ksh10.5 billion for the Kenya Devolution Support Programme II.

the office of the Auditor-General. These allocations will intensify anti-corruption efforts and reinforce public sector integrity.

Hon. Speaker, to enhance parliamentary oversight and legislative functions, I propose Ksh50.9 billion for Parliament. Further, to support the administration of justice, I propose Ksh30.4 billion for the Judiciary. These allocations are essential to uphold democracy, transparency and citizen trust in public institutions.

On allocations to the county governments, the Government remains committed to supporting devolution through inter-governmental fiscal transfers in line with Article 202 of the Constitution. I, therefore, propose to allocate Ksh428 billion in equitable share, which shall be transferred to the respective county governments as per the First Basis for Revenue Sharing Formula during the Financial Year 2026/2027. The Ksh428 billion represents 21 per cent of the most recent audited revenues for the Financial Year 2022/2023, which is way higher than the minimum of 15 per cent prescribed in Article 203(2) of the Constitution. Including the additional allocation from the national Government's share of revenue of Ksh16.6 billion to the proposed share level of Ksh428 billion implies that the county governments will receive a total of Ksh444.6 billion, just about Ksh5 billion less than what is in the 10-Point Agenda. Further to this allocation, I have proposed an additional allocation of Ksh57.4 billion from loans and grants from development partners.

The National Treasury has developed the Draft Public Finance Management (Amendment) Bill, 2025, which proposes to amend Sections 42 and 191 of the Public Finance Management Act, Cap. 412A. These amendments aim to provide for the submission of two separate Bills: The County Governments (Additional Allocations of National Government’s Share of Revenue) Bill, and the Proceeds from Loans and Grants from Development Partners Bill. This will mitigate delays in the approval and disbursement of the county governments additional allocations.

Hon. Speaker, now let me talk about the Equalisation Fund. To support the implementation of projects in marginalized areas, a sum of Ksh10.3 billion has been proposed as an allocation to the Equalization Fund in the Financial Year 2026/2027.

Now I turn to the county governments pending bills. The growing stock of pending bills in the county governments poses a fiscal risk. As of 30th June 2025, the county governments reported outstanding pending bills of Ksh183 billion. During its 27th Ordinary Session, the Inter-Governmental Budget and Economic Council (IBEC) approved and adopted the County Governments Pending Bills Action Plan, submitted by the Controller of Budget. The Council directed all county governments to customize and implement their respective pending bills action plans to progressively reduce the stock of pending bills. I urge the county governments to ensure full implementation of the agreed action plans.

Let me now turn to taxation measures. Having talked about expenditure and the money that is being allocated here and there, it is now time to see where money is coming from—the

taxation measures. Following the tragic events of 25th June 2024—a day that remains etched

in our hearts—which I hope will never be repeated in this country, the Government was reminded of the need to always listen to the voices of our citizens. As I mentioned at the beginning of this Statement that, I championed public engagements with Kenyans of all walks of life while putting together this Budget, and the supporting policy measures.

Over the last month, the focus has been more on the Finance Bill, 2026. As I mentioned, I engaged Kenyans widely in town hall meetings, at various media stations, at Bunge la Mwananchi, Jeevanjee Gardens, Nairobi, in Ongata Rongai, Kajiado County, comrades at the University of Nairobi, and through Citizen Digital X Space, just to mention a few. I thank all Kenyans who took time to attend those forums and engage with me. My assurance is that their voices have been reflected in the proposals that I am presenting today.

Hon. Speaker, in preparing these proposals, I have been guided by the overriding principle of addressing the well-being of the common mwananchi first. In this regard, I have deliberately chosen not to introduce new taxes or increase tax rates that would further overburden the hardworking Kenyans and their families. Instead, the measures are focused on reforms that seek to improve efficiency in tax collection, create fairness in the tax system and broaden the revenue base without burdening the mwananchi.

Hon. Speaker, allow me to share a striking reality. Today, only 3.1 million working Kenyans contribute to Pay-as-you-Earn (PAYE). Yet, millions of other Kenyans who make money in our economy do not contribute to the taxes we collect. Many of those people have been filing nil returns year after year. The burden of developing this country has, therefore, been on a few of us. This must change. We shall continue to broaden our tax base, a process that will help us to lower the tax rates to ease the burden on the few who are tax compliant.

To support the financing of the Financial Year 2026/2027 Budget, I will present highlights of two sets of proposals. The first set of proposals relates to custom measures agreed upon by the East African Community (EAC) Ministers and Cabinet Secretaries responsible for Finance and Economic Affairs during this year's Pre-Budget Consultations held in Arusha, Tanzania on 15th May 2026, which will conclude this coming weekend. The measures agreed upon target to support local manufacturing, promote value addition, strengthen industrial competitiveness, enhance food security, protect jobs, and align the regional tariff structure with Kenya's economic development projects.

The second set of proposals are contained in the Finance Bill, 2026. These measures are guided by three key principles. First, efficiency, to ensure that tax collection is done with minimal leakages and ease compliance. Second, fairness, to ensure that the tax burden is shared equitably among all. Third, simplicity, to ensure that compliance with tax laws is straightforward, transparent and predictable for all Kenyans. The measures I present today, a majority of which are targeted to simplify tax compliance and strengthen tax administration, are expected to yield an additional revenue of Ksh98.9 billion.

On custom measures, allow me to express my sincere appreciation to this House for the approval granted to the Custom Measures on 8th May 2026, which I subsequently presented during the Pre-Budget Consultations held in Arusha, Tanzania on 15th May 2026. I wish to inform this House that all those measures were subsequently adopted by the EAC Ministers and Cabinet Secretaries responsible for Finance and Economic Affairs. These measures will take effect from 1st July 2026. I will now highlight some of them

Hon. Speaker, high production costs continue to constrain growth and competitiveness of local industries, particularly where manufacturers rely on imported inputs that are not available locally. To lower the cost of production for our local industries and make locally produced goods affordable, Kenya secured an approval at the region to continue applying a zero per cent duty remission on selected inputs that are used in the manufacture of pharmaceutical products, roofing materials, automotive parts for vehicles, motorcycles and cold rooms for preservation, leather processing and the assembly of smart mobile phones, laptops and tablets.

feeds by Kenyans, Kenya was allowed to continue importing wheat at a duty remission rate of 10 per cent instead of the common external tariff rate of 35 per cent; continue importing inputs for manufacture of animal feeds duty free under the EAC Duty Remission Scheme and apply a zero per cent Import Duty on dates that will be consumed by our Muslim brothers and sisters during the Ramadhan period in 2027.

and the associated value chain. Kenya was granted a zero per cent duty remission on selected inputs that are used in the manufacture of automotive parts.

To support local manufacturing of paper and paper products, Kenya was allowed to continue applying stays of application at a rate of 35 per cent on craft paper and paperboard, printed poly-bags, sacks and bags and related packaging materials, instead of the common tariff rates of 25 per cent.

commencement of another financial year. To provide sufficient time for verification and validation of filed returns, I propose revisions to the timelines for filing individual income tax returns. Under the proposal, taxpayers with nil returns will be required to file within one month after the end of the year of income since they have no tax liabilities to report. Taxpayers whose income is fully taxed at source, including persons earning employment income only, will be required to file within four months after the end of the year of income. All other taxpayers will continue to file their returns by 30th June every year. Similarly, all businesses will continue to file their returns by 30th June every year. Therefore, it is not true that we are reducing the filing period for everyone, thus making the filing of returns more complicated.

Currently, gains arising from offshore transfers where the value of the transferred shares is derived from assets located in Kenya, are not taxed. To ensure that gains derived from Kenyan assets remain taxable in Kenya, irrespective of how the transactions are structured, the Bill proposes to amend the Income Tax Act to ensure that all gains from transfer of assets located in Kenya get the same tax treatment, irrespective of the location of the beneficial owners.

When companies make profits, those profits should find their way back to shareholders within a reasonable time. Currently, some companies have been holding back their profits indefinitely simply to defer paying the dividend tax. This is a loophole that needs to be addressed. In order to provide greater certainty in the application of the deemed dividend provisions, which are already in law; and to discourage indefinite retention of profits solely for the purpose of deferring dividend taxation, the Bill proposes to introduce a minimum deemed dividend distribution threshold of 60 per cent of undistributed income.

Hon. Speaker, rapid advances in technology have transformed the way businesses make payments, distribute software, and provide services across borders. However, the current Income Tax Act provisions do not clearly address the tax treatment of certain payments arising from software distribution arrangements, payment card schemes, payment processing systems, and related digital platforms. This has created uncertainty and disputes regarding the taxation of interchange fees, merchant service fees, and other payments made for access to these systems. The Bill, therefore, proposes amendments to clarify the definition of management or professional fees and royalties in order to provide a clear legal framework for the taxation of such payments and reduce opportunities for revenue leakage.

Gambling activities have grown significantly in recent years, particularly through digital platforms. While these are legitimate activities, winnings from gambling are income and, like any other income, they should be taxed. The Bill, therefore, proposes to introduce Withholding Tax on winnings, lotteries and prize competitions.

The scrap metal trade is a significant economic activity that supports the livelihoods of many Kenyans. To improve traceability of transactions and strengthen compliance in the scrap metal trade, the Bill proposes to introduce a Withholding Tax on income earned from the sale of scrap metal at a low rate of 1.5 per cent of the gross amount paid.

Currently, payments made by the national carrier to non-resident service providers are exempt from withholding tax, while similar payments when made to residents are taxed. To promote fairness and ensure consistent tax treatment between resident and non-resident service providers, the Bill proposes to remove the exemption from withholding tax on payments made by the national carrier to non-resident service providers.

Hon. Speaker, let me now turn to proposed amendments to the Value Added Tax (VAT). Dialysis remains a life-sustaining treatment for many Kenyans living with kidney disease, yet the cost of essential renal treatment equipment continues to place pressure on households and healthcare providers. The Bill, therefore, proposes to exempt dialysers, which are critical life-saving components for patients experiencing kidney failure, from VAT in order to reduce costs and make renal treatment more affordable.

The Government recognizes the important role that trade in used clothing and footwear, commonly known as mitumba, continues to play in supporting livelihoods and providing affordable access to clothing across the country. To simplify compliance, the Bill proposes to charge VAT at the point of importation, while subsequent domestic sales of second-hand clothing and second-hand footwear will be exempt from VAT. This means that mitumba traders selling to Kenyans will not be burdened with VAT obligations. Contrary to what is being said out there, we are making mitumba even cheaper because there will be no multiple VAT charges. You will pay only once at the point of entry.

Currently, passengers arriving at ports of entry in Kenya are allowed VAT exemption on value of goods not exceeding US$300. This threshold has remained unchanged and has not kept pace with current realities. The Bill, therefore, proposes to increase the VAT exempt threshold on value of goods for passengers arriving at our ports of entry from US$300 to US$2,000.

The scrap metal sector plays an important role in supporting local manufacturing and recycling activities, but it presents significant challenges in the administration of input VAT. To simplify VAT administration within the sector while complementing the Withholding Income Tax framework proposed under the Income Tax Act, the Bill proposes to exempt scrap metal from payment of VAT.

Hon. Speaker, PPPs continue to play an important role in the delivery of strategic infrastructure projects across the country. To reduce the cost of implementing these projects, the Bill proposes a VAT exemption for goods and services imported or procured locally for use solely in approved PPP infrastructure projects.

The rapid growth of digital payment platforms has created uncertainty regarding the VAT treatment of certain payment facilitation and processing services. While these services support financial transactions, they are distinct from the underlying financial services. The Bill, therefore, seeks to clarify that core financial services, including money transfer services such as M-Pesa, will remain exempt from VAT while platforms that facilitate services such as merchant acquiring, payment gateway, aggregation and settlement services will not qualify for exemption.

Hon. Speaker, to promote consistency in the treatment of input VAT and support proper administration of the VAT framework, the Bill proposes adjustment of input VAT previously claimed where goods that were intended for taxable supply subsequently become exempt while still in stock. Kenya's tax expenditure was estimated at Ksh286 billion or 1.8 per cent of GDP in 2024, a decline from Ksh368 billion or 2.4 per cent of GDP in 2023.

To further reduce tax expenditures, I propose to rationalise some of the existing incentives, such as:

The proposed amendments to the Tax Procedures Act seek to strengthen tax administration, improve compliance, support digitization and make it easier for taxpayers to meet their tax obligations. Currently, foreign investors are required to obtain Kenya Revenue Authority PIN before opening Central Depository and Settlement Corporation (CDSC) accounts to participate in trading in the Nairobi Securities Exchange (NSE). In order to improve the attractiveness of Kenya's capital market to foreign portfolio investors, the Bill proposes to exempt foreign investors from the requirement to obtain a KRA PIN solely for purposes of opening CDSC accounts.

Income earned by non-resident investors from investment in the NSE is subject to Withholding Tax as a final tax. They are not required to file annual income tax returns. I am grateful because this House approved the Virtual Asset Service Providers Bill of 2025, which was enacted in 2025. Currently, there is no reporting framework for virtual asset transactions. In order to address this gap, the Bill proposes to introduce a virtual asset reporting framework for virtual asset service providers so as to improve visibility of virtual asset transactions and align Kenya's reporting framework with international best practices.

To simplify compliance, reduce filing errors and improve efficiency in tax administration, the Bill proposes to amend the Tax Procedures Act to provide for pre-populated tax returns using information already available to KRA. Under this amendment, taxpayers still retain the right to review, confirm or amend the information before submitting their returns.

To strengthen the integrity of the tax system and prevent tax arrangements designed primarily to obtain a tax benefit while presiding in fairness for compliant taxpayers, the Bill proposes the introduction of a general anti-avoidance rule which is applicable across tax laws. The Tax Procedures (Amendment) Act of 2024 provided for a tax amnesty on penalties, interest and fines for taxpayers on tax liabilities approved up to 31st December 2023. This facilitated taxpayers to clear principal tax liabilities to Government. In order to encourage settlement of existing tax liabilities by more taxpayers, the Bill proposes a six-month amnesty beginning 1st July 2026 for tax liabilities accrued up to 31st December 2025. Under this amnesty, taxpayers who settle the principal tax due within the amnesty period will qualify for waiver of the related penalties, interest and fines.

To support faster resolution of system-related issues and improve taxpayer confidence in digital tax administration, the Bill proposes to allow for waiver of penalties and interest by the Commissioner up to a specified threshold of Ksh2 million arising from electronic tax system errors. To improve continuity of tax records and simplify compliance for reinstated entities, the Bill proposes to provide for automatic reinstatement of Personal Identification Number (PIN) where the registered company or other entity is restored to the official register. To improve efficiency in tax administration, the Bill proposes to allow tax assessments to be issued based on information lawfully available to the Commissioner.

To further align enforcement of tax compliance, the Bill proposes to amend the Tax Procedures Act to clarify that enforcement of tax collection when a Tax Appeals Tribunal or a court judgment on a tax dispute is in favour of the Commissioner shall only be suspended where a stay order has been granted. To lower compliance costs and simplify customs clearance procedures, the Bill proposes to remove the requirement for importers to present certificates of origin where such certificates are not necessary for purposes of claiming preferential tariff treatment.

Hon. Speaker, under the Miscellaneous Fees and Levies Act, the Bill proposes to rationalise the application of Import Declaration Fee and Railway Development Levy exemption on aircraft by limiting the exemption to aircraft parts and large aircraft used for commercial air transport. This measure is intended to better target the exemption while supporting Kenya's position as a regional hub for aircraft maintenance and aviation services. The Bill also proposes amendments to clarify the application of customs procedures to all fees

and levies imposed under the Miscellaneous Fees and Levies Act. These measures are intended to improve administration and support prudent fiscal management.

To support the growth of the real estate investment trust market and development of Kenya's capital markets, the Bill proposes to exempt from Stamp Duty transfers of beneficial interest in property into approved real estate investment trusts. This measure complements the proposed amendments under the Income Tax Act on exemption of real estate investment trusts from Capital Gains Tax. In line with the proposed simplified framework under the Excise Duty Act on mobile phones, the Bill proposes to exempt imported mobile phones from imported declaration fee and Railway Development Levy. This is another benefit that is not being talked about by naysayers of the Bill.

To increase resources available for road maintenance while ensuring that existing annuity obligations continue to be met, the Bill proposes amendments to the Road Maintenance Levy Act to reduce the allocation to the Road Annuity Fund from Ksh3 per litre to Ksh1.5 per litre of fuel. This reduction of Ksh1.50 per litre of fuel will be allocated to the Road Maintenance Levy Fund.

Hon. Speaker, as I conclude, I want to underscore that we have navigated a period of extraordinary challenges, yet the economy has held firm. Kenyans have demonstrated remarkable resilience and patience and the Government has remained steadfast in its commitment to deliver on the promises of BETA at the most difficult period in the history of this country.

This Budget was carefully crafted against a backdrop of limited fiscal space and competing priorities. It reflects prudent choices and disciplined fiscal management while directing resources towards programmes and interventions that will have the greatest impact on the lives of ordinary Kenyans, while staying firmly on course with our fiscal consolidation plan. The reforms I have outlined today are designed to cushion our citizens, strengthen economic resilience and lay the foundation for sustainable growth and transformation. They will stimulate job creation, ease the cost of living and accelerate economic transformation, which our people deserve.

This Budget is deliberate, decisive and targeted. It channels scarce resources to where they catalyse the greatest economic and social returns; to smallholder farmers and pastoralists, Medium, Small and Micro Enterprises (MSMEs), the youth, health and education, infrastructure that connects markets and to institutions that uphold the rule of law. Every allocation is chosen to multiply employment, protect the vulnerable, advance equity and unlock private investment. By prioritising inclusive bottom-up growth, we will not only sustain recovery, but also accelerate shared prosperity across Kenya. This is, therefore, a Budget for the mwananchi. This is a Budget for the people. I call upon Hon. Members and all Kenyans to stand behind its implementation as we work together with purpose and resolve towards our shared prosperity. Together, we can translate these investments into jobs, higher incomes and a better future for every Kenyan.

Hon. Speaker, I thank His Excellency the President, Dr William Samoei Ruto, and His Excellency the Deputy President, Professor Kithure Kindiki, for their unwavering support, leadership and counsel as we prepared this Budget. I am forever grateful to the President for the support he has given me and my Ministry. I am also greatly indebted to the Prime Cabinet Secretary, the Attorney-General, my fellow Cabinet Secretaries, all Principal Secretaries, accounting officers and personnel across Government Ministries, Departments and Agencies (MDAs), who diligently contributed to the development of the Financial Year 2026/2027 Budget.

I thank the Speakers of the National Assembly and the Senate, the Leaders of the Majority and Minority Parties, the entire House leadership, including the respective Clerks, for supporting the approval process of the Financial Year 2026/2027 Budget. My sincere thanks

also go to the Chairpersons and the Members of the Budget and Appropriations Committee and the Finance and National Planning Committee, all the Departmental Committees of this House, and the staff of the Parliamentary Budget Office for their constructive input and leadership during the approval process of this Budget.

I appreciate, in a special way, Dr Chris Kiptoo, the Principal Secretary for the National Treasury and the staff of the National Treasury, who worked tirelessly for long hours to ensure that this Budget and the supporting documents were prepared and submitted within the legal timelines. I also wish to acknowledge my two other Principal Secretaries at the National Treasury, namely, Dr Bonface Barasa Makokha, Principal Secretary for the State Department for Economic Planning; and Mr Cyrell Wagunda Odede, Principal Secretary for the State Department for Public Investments and Assets Management, together with their respective staff, for their support during the preparation and finalization of the Financial Year 2026/2027 Budget.

My sincere appreciation also goes to the Governor of the Central Bank of Kenya, the Commissioner-General of the Kenya Revenue Authority, the management and staff of both institutions and all MDAs for their valuable contributions to the Budget-making process. My gratitude goes to our multilateral and bilateral development partners for their continued technical and financial support. I also thank the private sector for its participation and contribution throughout the budget-making process.

Hon. Speaker, I equally appreciate members of the Fourth Estate and other non-State actors for their active engagement and participation during the Financial Year 2026/2027 Budget-making process.

I cannot forget to extend my sincere thanks to my dear wife, Madam Rhoda Mbadi, and my children, who have remained my pillar of strength.

Cabinet Secretary, you may now take your seat.

Power! Power!

Order, Hon. Members! I thank the Cabinet Secretary for the National Treasury and Economic Planning for ably making a public pronouncement of the Budget Highlights for the National Government for the Financial Year 2026/2027 and the Medium Term, and the Revenue Raising Measures. In this regard, I confirm that, in conformity with the provisions of Sections 39 and 39A of the Public Finance Management Act, and Standing Order 244C, the Cabinet Secretary has already submitted to the National Assembly the relevant legislative proposals that are necessary to actualize the revenue-raising measures to finance the 2026/2027 Budget. This has since culminated in the Finance Bill, 2026, which is under consideration by the House.

It is now my pleasure to invite all Hon. Members, the Cabinet Secretary for the National Treasury and Economic Planning, other Cabinet Secretaries, representatives of the Judiciary, members of the diplomatic corps and all invited guests to a reception at the Parliament Courtyard hereafter.

Hon. Members, the House now stands adjourned until Tuesday, 16th June 2026 at 2.30 p.m. I thank you.

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