NAIROBI, April 29 (Xinhua) — Kenya’s Cabinet on Tuesday resolved to implement significant budget realignments in line with the government’s fiscal consolidation policy aimed at reducing the budget deficit.

During a Cabinet meeting held in the national capital of Nairobi and chaired by President William Ruto, cabinet secretaries were instructed to work with the National Treasury to identify and execute the necessary adjustments within their respective ministries and state departments.

“These adjustments are part of broader austerity measures designed to strengthen fiscal discipline, reduce public debt vulnerabilities, and create the fiscal space necessary to deliver essential public goods and services,” the presidency said in a statement issued after the meeting.

According to the statement, the budget realignment aims to cap the fiscal deficit at no more than 4.5 percent of gross domestic product for the 2025/2026 financial year, down from 5.3 percent in 2023/2024 and 5.1 percent in 2024/2025, with a medium-term target of reducing the deficit to 2.7 percent.

As a result, the Cabinet said the initial budget estimates of 4.3 trillion Kenyan shillings (about 33.2 billion U.S. dollars) will undergo substantial revisions before being tabled in the Parliament.

The Cabinet also approved the Finance Bill 2025, which, according to the presidency, seeks to minimize the introduction of new taxes and instead improve tax administration through a new legislative framework.

In June last year, Ruto was forced to withdraw the Finance Bill 2024 after widespread anti-government protests led by young demonstrators erupted across the country in opposition to a range of unpopular tax increases.

On Tuesday, the presidency said key provisions of the Finance Bill 2025 include streamlining the tax refund process, closing legal loopholes that delay revenue collection, and reducing tax disputes by amending the Income Tax Act, VAT Act, Excise Duty Act, and the Tax Procedures Act.

The bill also proposes critical reforms to support small businesses, including a provision allowing them to fully deduct the cost of everyday tools and equipment in the year of purchase, thereby eliminating unnecessary delays in accessing tax relief.