The National Treasury’s 2026/27 budget has reignited debate over Kenya’s growing debt burden, with concerns emerging over the government’s plan to finance expenditure through additional borrowing estimated at Sh1.1 trillion.
Speaking in Migori ahead of the national budget reading by Treasury Cabinet Secretary John Mbadi, the Chairperson of the Budget and Appropriations Committee at the Migori County Assembly Mr Graham Kagali warned that continued borrowing without corresponding productivity growth could worsen the country’s economic challenges.
Graham who is also Member of County Assembly South Kanyamkago decried that many Kenyans are already struggling to make ends meet, citing salaried workers such as teachers whose incomes are increasingly strained by the rising cost of living.
“The country’s budget continues to grow, but the economy has not expanded productively at the same pace. Additional borrowing should be controlled and directed strictly towards productive investments that generate returns,” he said.
The budget chair called on the National Treasury and the Executive to review borrowing levels and establish limits on debt accumulation, particularly external loans that attract high interest rates and increase pressure on public finances.
Frther, he proposed a cap on large-scale capital expenditure projects, urging the government to prioritise completion of ongoing projects instead of launching new ones.
“The President should focus on completing projects already underway before committing public resources to new initiatives. This will enhance value for money and reduce wastage,” he noted.
His remarks come amid concerns from businesses over shrinking consumer spending and a challenging tax environment.
According to the county legislator, many businesses are scaling down operations or shutting their doors as consumers reduce spending and enterprises seek ways to avoid increasing tax obligations.
He also criticised what he termed excessive expenditure within the national government, arguing that public spending should be rationalised to free up resources for development.
On county financing, the budget chair expressed optimism that devolved units could receive an increased allocation from the current revenue-sharing framework, potentially pushing county allocations to about Sh450 billion.
However, he cautioned that any additional resources allocated to counties would remain insufficient compared to growing development and service delivery demands.
“Even with the anticipated increase, the additional allocation will be a drop in the ocean considering the needs facing counties,” he said.
He noted that the Division of Revenue Act (DORA), which determines the sharing of nationally raised revenue between the national and county governments, is unlikely to undergo significant changes despite calls for greater fiscal decentralisation.
The county legislator also called for stronger oversight mechanisms at the devolved level, saying county assemblies must intensify scrutiny of expenditure to ensure public funds are used prudently.
“As counties receive more resources, there must be enhanced oversight by county assemblies to guarantee accountability and value for money,” he said.
The concerns also reflect growing public debate over the sustainability of Kenya’s debt levels, the effectiveness of public spending, and the balance between national and county development priorities as the government seeks to navigate fiscal pressures and stimulate economic growth.
About the Author
