The government should not allocate billions of shillings to ministries and counties that lack the capacity to spend the money, financial professionals have advised.
The experts say the practice is fuelling wasteful supplementary budgets, slowing development projects and undermining value for taxpayers.
Speaking during a post budget public finance discussion by the Institute of Certified Public Accountants of Kenya, office of the controller of budget argued that public spending plans should be based not only on available resources but also on the ability of government agencies to implement projects within the financial year.
“If we know that you cannot absorb the funds, then let’s not give it to you, ministries frequently receive large allocations only to spend a fraction of the money before seeking reallocations through supplementary budgets,” Deputy Director Research and Planning, in the Office of the Controller of Budget Cyrus Ondari said.
From the forum it emerged that weak procurement systems, implementation delays and poor project planning continue to limit budget absorption, particularly for development expenditure, leaving billions of shillings idle while critical infrastructure and public service projects stall.
For Instance, a review of the latest Controller of Budget report for the nine-month period to March 2026, shows that five counties did not refund unspent balances from the 2024-25 financial year to their County Revenue Fund (CRF) accounts.
Bomet, Kericho, Laikipia, Nairobi City and Nandi County failed to return the funds as required under Section 136 of the Public Finance Management (PFM) Act, 2012.
Instead, the unspent balances were carried forward and used in the subsequent financial year.
“We monitor how resources allocated to national and county governments are utilised to ensure they translate into effective service delivery,” added Ondari.
The warning comes as Kenya prepares for another budget cycle amid mounting pressure to balance growing debt obligations, rising recurrent expenditure and ambitious revenue targets.
ICPAK chief executive officer Grace Kamau said the country’s spending priorities remain heavily skewed towards recurrent expenditure, leaving inadequate resources for investments that drive long-term economic growth.
She noted that of the approximately Sh4.8 trillion national budget, more than three-quarters is committed to recurrent expenditure and debt servicing, significantly limiting the government’s ability to finance productive development programmes.
According to Kamau, nearly Sh2 trillion is allocated to recurrent expenditure while another Sh1.5 trillion goes towards debt repayment, leaving a relatively small portion available for development projects.
“As we get into the next planning cycle, we must start seeing some trajectory towards reducing our expenditure on recurrent expenditure and moving towards development,” she said.
She argued that increased investment in infrastructure, productive sectors and other development programmes would generate stronger economic activity, expand the tax base and ultimately improve government revenues.
Development spending has increasingly come under pressure as Kenya grapples with rising public debt servicing costs, forcing a growing share of tax revenues to finance salaries, operations and debt repayments instead of capital investments.
The experts also questioned whether the government’s ambitious tax collection targets are achievable under the current economic environment.
The National Treasury is targeting about Sh3 trillion in ordinary tax revenue, alongside additional collections from appropriations-in-aid, to finance government spending.
However, Kamau warned that unrealistic revenue assumptions expose the country to wider fiscal deficits when expenditure commitments proceed despite revenue collections falling short of projections.
“We are going to raise Sh3 trillion from taxes, but the question is how realistic is this? Are we really going to collect the Sh3 trillion?” she posed.
She cautioned that governments often commit expenditure based on optimistic revenue forecasts, only to resort to increased borrowing or larger budget deficits when collections underperform.
The discussion also raised concerns over the quality of public expenditure, with experts questioning whether taxpayers are receiving value for money from government procurement.
Convener and public finance and tax committee at ICPAK Robert Waruiru, argued that compliance with procurement procedures alone should not be the benchmark of accountability if public institutions continue purchasing goods and services at prices significantly above prevailing market rates.
“There is a joke that goes around that so long as the procurement process has been followed, value for money becomes secondary,” said Waruiru.
He challenged oversight institutions to interrogate government spending more aggressively, asking why ordinary household items often cost several times more when procured by public institutions.
“Why is a tissue paper costing Sh200 when I go to the shop and get it at Sh30 or Sh50?” he asked.
The panel called for stronger oversight by Parliament, the Office of the Auditor-General, the Controller of Budget, professional bodies and citizens to ensure public resources deliver measurable outcomes.
They further called for realistic budgeting at both national and county levels, warning that inflated revenue projections often create funding gaps that contribute to pending bills and stalled projects.
