Government spending on development projects rose sharply in the first nine months of the current financial year, signalling a renewed effort to support economic activity. Treasury data shows that ministries, departments, and agencies spent Sh262.63 billion between July and March 2026, up from Sh170.83 billion in the same period last year, representing a 53.7 percent increase.
The rise in spending follows a period of slowdown in capital expenditure, where development spending had dropped to an 11 year low. Budget cuts and reallocations toward recurrent needs such as security operations and drought response had reduced funding available for capital projects, slowing progress on key infrastructure works.
The latest increase points to a shift in government priorities, with the State now seeking to restart stalled infrastructure projects, create jobs, and support private sector activity. This comes at a time when the country is still dealing with the effects of drought, inflation, and global economic uncertainty, which have weighed on overall growth.
Despite the rebound, the recovery in development spending is taking place under significant fiscal pressure. Debt service costs reached Sh1.36 trillion during the review period, which is equal to 79.5 percent of tax revenues. At the same time, revenue underperformance continues to push the government toward more borrowing and spending adjustments to meet its obligations.
The figures highlight the balance the government must strike between supporting growth through increased development spending and managing rising debt costs. While higher spending on infrastructure is expected to boost economic activity, sustaining this momentum will depend on stronger revenue collection and tighter control of debt levels.
