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{
    "id": 1592970,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1592970/?format=api",
    "text_counter": 438,
    "type": "speech",
    "speaker_name": "Balambala, JP",
    "speaker_title": "Hon. Abdi Shurie",
    "speaker": null,
    "content": "THAT, this House adopts the Report of the Public Debt and Privatization Committee on its consideration of the Consolidated Fund Services for the Budget Estimates for the 2025/2026 Financial Year laid on the Table of the House on Wednesday, 11th June 2025. Hon. Deputy Speaker, this marks the seventh Report on the CFS expenditures presented and deliberated by the National Assembly and provides basis for the House to consider non-appropriated and mandatory expenditures of the national government. Hon. Deputy Speaker, I extend my sincerest gratitude to the diligent members of the Public Debt and Privatisation Committee for their unwavering commitment in examining these Estimates of Expenditure and for tabling this Report for our deliberation today. Our appreciation also goes to the key stakeholders who contributed critical insights during the Committee’s sessions and to the Committee secretariat for their support. The Consolidated Fund Service (CFS) expenditures are obligatory expenditures that are deducted directly from the Consolidated Fund and are not included in the Annual Appropriation Bill, as stipulated in Article 221(7) of the Kenyan Constitution. Today, these mandatory expenditures are the largest expenditures of the Government. CFS expenditures in the Financial Year 2025/26 will amount to Ksh2.14 trillion, thus indicating a decrease of Ksh148 billion from Ksh2.28 trillion in the Financial Year 2024/2025. The Committee observed that this decline, which will provide fiscal relief in Financial Year 2025/2026, is largely attributed to reduced debt service costs, and will provide much needed fiscal space that should be utilised prudently. The Financial Year 2025/2026 CFS expenditures constitute of: Public debt service expenses at Ksh1.9 trillion, pension expenditure at Ksh234.9 billion, and salaries, allowances and miscellaneous expenditures at Ksh4.7 billion. Hon. Deputy Speaker, the review of the CFS expenditures for the Financial Year, 2025/2026 presents a timely opportunity to realign our fiscal management strategies towards long-term sustainability and growth. While debt service remains the dominant component, accounting for 89 per cent of CFS expenditure, a projected 7 per cent decline offers a short- term fiscal reprieve. This window, though narrow, should be strategically leveraged to improve budget execution, invest in growth-enhancing sectors, and reduce the burden of non- discretionary expenditures. In the Financial Year 2025/2026, public debt servicing is projected at Ksh1.9 trillion, comprising of Ksh1.3 trillion in domestic debt service and Ksh586.4 billion in external debt service. This reflects a Ksh140.67 billion from the Financial Year 2024/2025. The decline is mainly attributed to a significant drop in redemption costs by Ksh242.59 billion, although this is partially offset by a Ksh101.92 billion increase in interest payments. Interest payments for total debt will reach Ksh1.1 trillion while maturing debt will amount to Ksh803.7 billion. The high interest obligations will account for 40 per cent of ordinary revenue, underscoring the growing cost of debt and its implications for fiscal space. Kenya’s fiscal outlook reflects a notable reallocation of public spending. Between Financial Years 2015/16 and 2025/26, interest payments as a share of GDP is projected to increase from 3.2 per cent to 5.7 per cent while development expenditure will decline from 7.2 per cent to 3.5 per cent. This inverse trend signals a structural crowding-out effect, where escalating debt service obligations are displacing capital investment in infrastructure, education, and other development-enabling sectors. The opportunity cost is notable as resources that could stimulate economic transformation and improve welfare are increasingly diverted toward servicing past borrowing. The broader macroeconomic impact is reflected in the decline of total investment as a share of GDP, from 19.5 per cent in the Financial Year 2015/2016 to just 4.1 per cent for the Financial Year 2025/26. Such underinvestment undermines capital formation, lowers the marginal productivity of labour, and reduces the country’s long-term growth potential. The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor."
}