The government has unveiled a significant economic reform package that could provide much-needed relief to struggling households and businesses.

Central to this plan is a substantial reduction in Value-Added Tax (VAT) from 16 per cent to 14 per cent, coupled with cuts in corporate tax and other levies.

Treasury Cabinet Secretary John Mbadi announced the reforms during the launch of the FY 2025/26 Budget Preparation Process.

While emphasizing the need for fiscal prudence, Mbadi assured the nation that the government would prioritize efficiency, accountability, and transparency in public spending.

According to Mbadi, the government will cease supporting any additional expenditures but instead focus on enhancing efficiency, accountability, and prudent use of resources.

Read More

  1. ELIZABETH WASUNNA: The power of partnerships in elevating women-owned SMEs in Africa
  2. Kenya, China ink landmark credit facility, MoU to spur infrastructure development
  3. Treasury CS John Mbadi announces key committee for accounting transition

To enhance financial oversight and combat corruption, the government plans to implement a new financial management system.

This system will focus on streamlining procurement processes and improving transparency in public expenditure.

"Agriculture will be prioritized to support manufacturing and economic growth, with a focus on SMEs and housing," Mbadi stated.

"Despite operating under fiscal constraints, the government will work to ensure growth and broaden opportunities."

The government's fourth medium-term plan outlines a comprehensive strategy for economic transformation, focusing on agriculture, MSMEs, housing, healthcare, and digital infrastructure.

By investing in these sectors, the government seeks to improve livelihoods, reduce poverty, and enhance Kenya's competitiveness on the global stage.

"However, it's important to note that following the withdrawal of the 2024 Finance Bill, the Government has had to forego additional revenue measures. We therefore implemented measures aimed at aligning our priorities with the available resources," Mbadi said.

While the implementation of the FY 2024/25 Budget has commenced, the withdrawal of the 2024 Finance Bill has necessitated adjustments to the government's fiscal priorities.

Despite these challenges, the proposed tax reforms and economic stimulus measures offer a promising outlook for Kenya's economic future.