Treasury Defends Higher Budget Deficit Amid Lawmakers’ Concerns Over Debt and Pension Delays
Committee Chairperson Hon. Shurie Abdi Omar declared that commitment fees would undergo a separate investigation because of their complex nature.
The matter was discussed during a sitting of the National Assembly’s Committee on Public Debt and Privatisation, chaired by Mbalambala MP Hon. Shurie Abdi Omar. Photo/Courtesy
By Ruth sang
The National Treasury has justified its decision to revise Kenya’s fiscal framework which now results in an expanded budget deficit of 6.1 percent of the country’s Gross Domestic Product (GDP) for the 2025/26 financial year. This comes as Members of Parliament (MPs) continue to raise concerns about the country’s rising public debt and persistent delays in pension disbursements.
The matter was discussed during a sitting of the National Assembly’s Committee on Public Debt and Privatisation which Mbalambala MP Hon. Shurie Abdi Omar chaired. Treasury officials presented Supplementary Estimates No. 1 to the committee which showed the government’s updated spending and borrowing plans.
The Treasury representatives reported that government spending has risen from KSh 4.26 trillion to KSh 4.58 trillion according to the original budget approved by the government. The fiscal deficit expanded to KSh 1.11 trillion because of this upward adjustment. Officials attributed the increase to mounting expenditure demands coupled with lower-than-expected revenue collection.
They described some spending pressures as necessary expenses because they included expenditures for teacher salaries and security operations and emergency response for natural disasters like drought and flooding. The Treasury stated that these basic services need to continue without interruption because their suspension would bring about severe negative effects for the nation.
The lawmakers wanted to understand how the government supports its operations through borrowing while they requested details about loan applications across different ministries and state agencies. The growing cost of commitment fees which MP’s associates with penalties on authorized loans that remain unspent because of project delays became a significant concern for MPs.
Lamu West MP Hon. Muthama Stanley Muiruri challenged Treasury officials to explain the recurring delays. He questioned why ministries and agencies take several years to implement projects after loan agreements get signed which leads to substantial annual commitment fee costs.
The Treasury Principal Secretary confirmed that delays have existed as a traditional issue because land acquisition disputes and faulty project planning have been persistent structural obstacles. The Treasury now requires all projects to pass a pre-financing checklist assessment to confirm their readiness before they can receive external funding.
The Treasury defended its general approach to fiscal management of public debt through its recent Eurobond buyback operations which support debt repayment capacity while enhancing Kenya’s market presence. The Principal Secretary explained that the Treasury handles public financial management but Parliament makes final budgetary decisions.
The MPs raised their worries about pension payment delays which especially harmed retired teachers who depended on those payments. The organization currently handles only 55 percent of pension duties which creates suspicions about their operational capacity to manage important tasks.
Treasury officials confirmed that defined contribution scheme payments are current while revenue shortfalls caused delays in defined benefit scheme payments. The committee received assurance from them that the entire pension backlog would be resolved during the ongoing fiscal year.
Committee Chairperson Hon. Shurie Abdi Omar declared that commitment fees would undergo a separate investigation because of their complex nature. The committee has ordered the Treasury to submit detailed data about Kenya’s total debt stock and its repayment plans which will undergo further analysis.
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