The Kenyan economy has remained resilient, with key macroeconomic indicators pointing to a positive outlook. Real Gross Domestic Product growth has averaged 4.5 percent over the past five years, reflecting sustained economic activity. Inflation has declined and remained within the Central Bank’s target range of 5±2.5 percent, supporting price stability. Interest rates have also trended downward following the Central Bank’s accommodative monetary policy stance, with the Central Bank Rate declining from 13 percent in June 2024 to 9.0 percent in December 2025. The exchange rate has remained relatively stable, while the current account deficit has narrowed significantly from -5.2 percent of GDP in 2019 to -1.3 percent in 2024.

Despite these positive macroeconomic trends, the economy continues to grapple with a range of structural and emerging challenges that could dampen growth prospects if not adequately addressed. These include persistent revenue underperformance relative to expenditure needs, rising public debt and associated servicing pressures, and the accumulation of pending accruals that constrain liquidity within the private sector.

In addition, inefficiencies in public investment management continue to weaken the quality and timeliness of infrastructure delivery, while increasing vulnerability to climate change-related shocks such as droughts, poses risks to agriculture, food security, and overall economic stability. These pressures are further compounded by growing unemployment, particularly among the youth, which limits household incomes, suppresses domestic demand, and heightens social and fiscal pressures on government support programmes.

The 17th edition of the Budget Options is therefore anchored on confronting these challenges in a more targeted and strategic manner. In particular, it emphasizes the urgent need to clear and prevent the accumulation of government pending accruals to ease liquidity constraints in the private sector. The edition also underscores the importance of strengthening domestic revenue mobilization to support fiscal sustainability. In addition, it highlights the need to strengthen the public investment management framework for counties to enhance project execution and value for money. Collectively, these priorities are aimed at promoting sustainable economic growth, improving fiscal resilience, and fostering job creation and productivity across key sectors of the economy.