Treasury Cabinet Secretary John Mbadi has outlined the government’s transition to zero-based budgeting (ZBB) for the 2025/26 financial year, a move aimed at tightening public spending and curbing wastage.
Speaking during a town hall forum on Tuesday night, Mbadi said the National Treasury initiated the new approach in October and November 2024 by instructing all Ministries, Departments, and Agencies (MDAs) to justify their budgets from scratch using the Integrated Financial Management Information System (IFMIS).
“Each sector was justifying its zero-based budget—showing the actual number of employees, new staff they intend to hire, and the associated costs,” Mbadi explained.
Unlike the previous incremental method, where budgets were based on allocations from previous years, the ZBB model requires MDAs to defend every expenditure item. According to Mbadi, this ensures that only essential spending is approved, eliminating historical inefficiencies.
“Our budgeting process was on an incremental basis which simply meant we looked at the previous year’s allocation and added a bit more. That has changed,” he said.
To support this transition, the Treasury developed a tool within the IFMIS system to help standardize costs across all government departments. This, Mbadi said, would bring consistency and curb inflated procurement prices in public institutions.
The CS emphasized that the new model is part of broader reforms aimed at enhancing the use of national revenue and preventing unnecessary expenditure, especially as the government continues to face criticism over rising taxes and the high cost of living.
The announcement comes as the Treasury pushes the Finance Bill 2025, which includes controversial proposals to remove VAT zero-rating on essential goods such as medicine, clean energy components, and agricultural inputs—changes that critics argue could further burden ordinary Kenyans.
Despite growing public concern, Mbadi insists the aim is to make budgeting and taxation more efficient, not punitive.
“The Bill seeks to reduce reliance on aggressive tax-raising measures and instead focuses on improving efficiency through legislative reforms,” a Cabinet statement noted following Tuesday’s meeting.
The zero-based budgeting initiative is expected to significantly shape how public funds are allocated and spent, with stakeholders watching closely to see whether it delivers on its promise of financial discipline.
