The Division of Revenue Bill ( National Assembly Bills No. 10 of 2025)

REPUBLICOFKENYA

PARLIAMENT

NATIONALASSEMBLYBILLS (BillNo.10of2025)

THEDIVISIONOFREVENUEBILL,2025

(A Bill published in theKenyaGazetteSupplement No.38of2025 and passed by the National Assembly, without amendments, on 9th April,2025)

N.A./B/No.10/2025

THEDIVISIONOFREVENUEBILL,2025 ARRANGEMENTOFCLAUSES

Clause

• 1—Short title.
• 2—Interpretation.
• 3—Object and purpose of theAct.
• 4—Allocations to national and county governments.
• 5Variationinrevenue.

SCHEDULE

EQUITABLESHAREOFREVENUERAISED NATIONALLYBETWEENTHENATIONAL ANDCOUNTYGOVERNMENTSFORTHE 2025/26FINANCIALYEAR.

APPENDIX

EXPLANATORYMEMORANDUMTOTHE DIVISIONOFREVENUEBILL,2025

THEDIVISIONOFREVENUEBILL,2025 ABill for

• ANACTofParliament toprovidefor the equitable divisionofrevenueraisednationallybetweenthe national and county governments in the 2025/26 financial year,and for connected purposes.

1. This Act may be cited as the Division of Revenue Act, 2025.

ENACTED by Parliament of Kenya, as follows--

• 2.In this Act,unless the context otherwise requires, "revenue" has the meaning assigned to it under section 2 of theCommissiononRevenueAllocationAct.

3. The object and purpose of this Act is to provide fortheequitablesharingofrevenueraisednationally among the national and county governments in the 2025/26 financial year inaccordance withArticle 203(2)of the Constitution. 4. Revenue raised nationally in respect of the 2025/26financialyearshallbesharedequitably amongthe national and county governments as set out in the Schedule to this Act.

• 5.(1)If the actual revenue raised nationally in the financialyearfallsshortof theexpectedrevenuesetoutin the Schedule,the shortfall shall be borne by the national government.
• (2)Iftheactualrevenueraisednationallyinthe financialyear exceeds theprojectedrevenuesset outin the Schedule,the excess revenue shall accrue to the national government, and may be used to reduce borrowing or pay debts.

Short title.

Interpretation.

Cap.428.

Object and purpose of the Act.

Allocationsto nationaland county govermments.

Variation in revenue.

SCHEDULE

(s.4)

ALLOCATIONOFREVENUERAISEDNATIONALLYBETWEEN THENATIONALGOVERNMENTANDCOUNTY GOVERNMENTSFORTHE2025/26FINANCIALYEAR

| Type/level of allocation | AmountinKshs. | Percentage (%) of 2020/21auditedand approved Revenue i.e. Kshs. 1,570,562,945,014 | |----------------------------|-------------------|-------------------------------------------------------------------------------------| | A.Total Sharable Revenue | 2,835,040,979,609 | | | B.National Government | 2,419,382,005,36 | | | C. Equalization Fund | 10,589,554,076 | | | Ofwhich:a)0.5PerCentum | 7,852,814,725 | 0.5% | | b) Arrears | 2,736,739,351 | | | D. County equitable share | 405,069,420,197 | 25.79% |

Background

APPENDIX

EXPLANATORYMEMORANDUMTOTHEDIVISIONOF REVENUEBILL,2025

1. This memorandum has been prepared as an attachment to the Division of RevenueBill (DoRB),2025infulfilment of therequirements of Article 218(2)of the Constitution and section 191(5)of thePublic Finance Management Act (Cap. 412A). 2. 2.Article 218(2)of the Constitution requires that the Billbe submitted to Parliament every year together with a memorandum explaining: 3. a)theproposed revenue allocation set out in theBill; 4. b)the extent towhich theBillhas taken into account theprovisions ofArticle203(1)of theConstitution;and 5. asummaryofany significantdeviationfrom the recommendationsof theCommission onRevenueAllocation (CRA), with an explanation for each such deviation. 3. Section 191 (5) of the Public Finance Management Act (Cap. explains: 7. of the Constitution; 8. b)theextentofthedeviationfromtheCommissiononRevenue Allocation's recommendations; 9. ? the extent,if any,of deviation fromtherecommendations of the Intergovernmental Budget and Economic Council;and 10. d) any assumptions andformulae usedin arriving at therespective sharesmentioned in section 191(2) and (3)of thePublicFinance Management Act (Cap. 412A).

ExplanationoftheAllocationstotheNational andCountyGovernments asProposedintheBill

CountyGovernments'EquitableShare

4. The Bill proposes to allocate County Governments Kshs. 405.1 billionfor thefinancialyear2025/26 asequitableshareofrevenueraised

• nationally,translating to an increase of Kshs.17.6 billion from a base of KSh.387.4 billion allocated in the financial year 2024/25.

5. In the financial year 2024/25,the Division of Revenue (Amendment) Act, 2024, allocated Kshs.387.4 billion to County Governmentsasequitableshareresultingfrommediationbetweenthe NationalAssemblyand theSenate. 6. The National Treasury has proposed an allocation of Kshs. 2,419.4 billion to the National Government; and Kshs.405.1 billion to CountyGovernmentsinfinancialyear2025/26,translatingtoanincrease of Kshs.17.6 billion (see Table 1). 7. The proposed County Governments' equitable revenue share allocationofKshs.405.1billionisinformedbythefollowingfactors:

• a)Trendsinthe performance of revenue(this was takeninto consideration in determining the Kshs.17.6 billion increase in equitableshareofrevenueinfinancialyear2025/26);
• b)Increased expendituresforNational Governmentforpurposesof debt servicing coupled with a weakened shilling against the dollar;
• C The Governmentcommitment toimplement afiscal consolidation plan targetingtoreduce thefiscal deficit to4.3percent of GDPin financialyear2025/26.Thisisdesignedtoslowdown accumulation of public debt,improve primary surplus thereby achievefiscal sustainability;
• d)Financing constraints due to limited access to finance in the domestic and internationalfinancialmarkets;
• e)Low ordinary revenue collections attributed to the ongoing geopolitical shocks. The global economy is on a recovery path from the negative shocks in supplychain constraintsandthe

eAllocationtoCounty Table1:EquitableRevenueShare Governments,FinancialYear2025/26

| BUDGETITEM | Amount(KSh.million) | |--------------------------------------------------------------------------|-----------------------| | | 387,425 | | 1.Baseline(i.e.allocation in thepreviousFY2024/25) | | | Add: | 17,644 | | 2.AdjustmentforRevenueGrowth EquitableRevenueShareallocationforFY2025/26 | 405,069 | | (1+2) | |

Source:NationalTreasury

• risingUSFederalReserve interestrate that destabilizeddollar exchange rate and the international debt market.; and

8.The above proposed Equitable Share for financial year 2025/26 of Kshs. 405.1 billion is equivalent to 25.8 percent of the last audited and approved actual revenues raised nationally of KSh.1,570,563 million for financial year 2020/21 pursuant to Article 203(3) of the Constitution.

• f TheNationalGovernmentcontinues tosolelybear shortfallsin revenue inanygivenfinancialyear whereasthe County Governmentscontinuetoreceivetheirfullallocationdespitethe budget cuts affecting the National Government.

Evaluationof theBill against Article 203(1) of the Constitution

9. Article 218(2)(b) of the Constitution requires that the division of revenuebetweenthetwolevelsofgovernmentandamong county governments takesintoconsideration the criteria set outinArticle203(1) of the Constitution.The criteria include factors such as:national interest, publicdebt and othernational obligations,theneeds of the disadvantaged groups and areas, among others.

10.Table2provides an assessmentof the extent towhich thisBill has taken into consideration the requirements of Article 203(1) of the Constitution in estimating the division ofrevenue between the national andcountylevelsofGovernmentinthefinancialyear2025/26.

Table 2:Evaluation of the Bill against Article 203 (1) of the Constitution

| ITEMDESCRIPTION(KSh.millions) | ITEMDESCRIPTION(KSh.millions) | FY2021/22FY2022/23FY2023/24 | | | FY 2024/25* | 2025/26** | |------------------------------------------|---------------------------------------------------------------------------------------------|---------------------------------------|---------------------------------------|---------------------------------------|---------------------------------------|---------------------------------------| | | ORDINARYREVENUE(EXCLUDING AIA) | 1,775,624 | 2,141,584 | 2,565.959 | 2,631,418 | 2,835,041 | | | | 83,197 | 92,466 | 97,854 | 92,456 | 101,252 | | | National Interest[Article203(1)(a)] Enhancementofsecurity operations(police | 22.261 | 24.299 | 23.969 | 33.044 | 33.320 | | | vehicles.helicopters,defenseetc.) | 11.199 | 16.800 | 24.654 | 17.943 | 16.994 | | | Nationalirrigation&fertilizerclearance | 14.548 | 15.290 | 13.087 | 10.290 | 11.175 | | OVC.childwelfare.presidentialbursary. | Youthempowerment Nationalsocialsafetynet-(for olderpersons. | 29.286 | 31.074 | 31.120 | 29.178 | 33.763 | | | severedisability.HungerSaferyNet) | 1.800 | | | | | | | Primaryschooldigitalliteracyprogram Schoolexaminationfees(KSCE&KCPE& Grade6(CBCExamination) | 4.103 | 5.003 | 5.023.47 | 2.000 | 6.000 | | | | 1,174,013 | 930,354 | | 1,187,7841,340,88 | 1,606,419 | | B OtherNational obligations(Article.203 | Publicdebt(Art.203[1][b]) | 557,863 | 595,269 | 691,148 | 738,456 | 758,368 | | | [1]b]) | 136.978 | 145.951 | 211.019 | 227.357 | 239.623 | | CRA.SRC,NLC.NPSC.IEBC.TSC | Pensions.constitutionalsalaries&other Constitutional commissions(Art.248(2))i.e. | 299.333 | 321.968 | 332.497 | | 391.101 | | | Independentoffices(Art.248(3))-ie.,AG& | 6.499 | 6.981 | 8.756 | 8.808 | 9.430 | | | CoB | 37.883 | 38.477 | 41.002 | 40.865 | 42.488 | | OfficeandDPP | Parliament Otherconstiutionalinstitutions-StateLaw | 8.371 | 8.713 | 10.054 | 9.414 | 10.478 | | | Otherstatutory bodies(e.g.,EACC,RPP WPA.CAJ,IPOA.NGEC) | 7.036 | 8.462 | 9.002 | 8.911 | 9.714 | | | Judiciary | 17.918 | 18.297 | 22.287 | 22.505 | 25.750 | | D | Otherstatutoryallocations/earmarkedfunds | 43.845 | 46.420 | 56.532 | 65.283 | 29.785 | | E | (e.g.NG-CDF.AffirmativeAction) | 5,000 | 5,000 | 1,200 | 4,000 | 5,000 | | | Emergencies[Art.203(1)(k)] | 5.000 | 5.000 | 1.200 | 4.000 | 5.000 | | | a)Contingencies | | | | | | | | b)Strategicgrainreserve | | | | 8,000 | | | | | 6,825 | 7,068 | 10,867 | | 10,590 | | EqualizationFund[Art.203(1)(g)and(h)] | EqualizationFund[Art.203(1)(g)and(h)] | EqualizationFund[Art.203(1)(g)and(h)] | EqualizationFund[Art.203(1)(g)and(h)] | EqualizationFund[Art.203(1)(g)and(h)] | EqualizationFund[Art.203(1)(g)and(h)] | EqualizationFund[Art.203(1)(g)and(h)] | | | Ofwhich: | | | | 7.867 | 7.867 | | | AllocationinFY2025/26 | | | | 147 | 2.737 | | | Arrears BALANCETOBESHAREDBYTHE2 LEVELSOFGOVERNMENT | -7,429 | 547,843 | 577,106 | 447,918 | 353,411 | | | County Government allocationfrom revenueraised nationally ofwhich;- | 377,537 | 375,654 | 391,661 | 394,419 | 417,964 405.069 | | | a) EquitableShareofRevenue | 370.000 | 370.000 | 380.645 | 387.425 | | | | b) Additionalconditionalallocations financedfromrevenesraised nationally | 7.537 | 5.654 | 11.016 185,445 | 6.994 53,499 | 12.894 (64,553) | | HBalanceleftfortheNational Government | HBalanceleftfortheNational Government | -384,966 | 172,189 | | | |

• 11.National Interest:These are expenditures which relate to projectsandprogrammesthat:
• C arecriticaltotheachievement of thecountry'seconomic developmentobjectives;
• potentiallywillhave significantimpact onsocial well-beingof citizens;
• areanchoredintheVision2030andtheMedium-TermPlanIV (2023 -2027);
• O are addressing theBottom-Up Economic Transformation Agenda (BETA)oftheGovernment;
• have significantresource investmentrequirementsandwhose benefitsaccruenationwide;and
• O arecontainedinthe2025BudgetPolicyStatement.

The identified programmes of national interest include: activities subsidy initiatives; Youth Empowerment; provision of national social safety net for vulnerable groups, and school examination fees subsidy.

significantlybyKshs.8.8billionfromKshs.92.5billioninfinancialyear 2024/25 toKshs.101.3billion in financial year 2025/26 as shown in Table 2. This increase is largely accounted for by the Kshs. 4.6 billion increase in expenditures on National Safety Net Programme to cover the elderly persons under the Indigent Fund for Social Health Authority;and the Kshs.4.0 billion additional funding towards school examinationfees.

14.Other National Obligations:As provided forunder Article 203(1) (b)of the Constitution, the Bill has also taken into account the requirements for other national obligations,such as,mandatory pension contributions and/or payments, financing for constitutional offices, includingParliament andJudiciaryaswell as expensesrelatingtoother statutorybodies.These are estimated to cost Kshs.758,368 million in financialyear 2025/26 up fromKshs.738,456 million allocated in the

13.PublicDebt:TheBill has taken into account publicdebt related costs.These comprise the annual debt redemption cost as well as the interestpaymentfor bothdomestic andexternaldebt.Infinancialyear 2025/26, the allocation for payment of public debt related costs is expected toincreasefromKshs.1,340,588million allocatedinfinancial year 2024/25 toKshs.1,606,419 million allocated in the financial year 2025/26, reflecting an increase of Kshs. 265.8 billion.

financialyear 2024/25.More0ver,in financialyear 2025/26 Kshs.26.3 billionhasbeenearmarkedfor theNationalGovernment-Constituency DevelopmentFund(NG-CDF)andKshs.3.5billionAffirmativeAction SocialDevelopment Fund.After takingintoconsideration the above expendituresaswellasdebtrelatedcosts,theNationalGovernmentisleft with a deficit amounting to Kshs. 64.6 billion, which shall further stretch borrowingandincreasepublicdebt.

Governmentsenhancetheirrevenuecollection.TheseincludetheNational

• 15.Fiscal Capacity and Efficiency of County Governments: The National Treasury has proposed an increase of Kshs. 17.6 billion equitable share to County Governments.Similarly,it is expected that the County Governments will alsogrow their Own Source Revenue (OSR).The NationalTreasuryhasfurther institutedmeasuresto support County Rating Act,2024,the County GovernmentsRevenueRaisingProcess Bill currently under consideration,the Model Tariffs and Pricing policy proposed for adoption by County Governments as well as the proposed IntegratedCountyRevenueManagementSystem.TheNationalTreasury in theFourth-Generationbasis so as toenhance OSRcollectionby the Countiesinorder toincentivize theattainment of theintendedobjectives oftheabovemeasures.
• 16.County Governments'abilitytoperform the functions assigned tothem andmeetotherdevelopmentalneedsof theCounty Governments:Asexplained above,thebaselinefor theequitable share allocationforthefinancialyear2025/26wasderivedfromtheDivisionof RevenueAct,2024.Thisbaselineisinformedbycostingofexpenditure for devolvedfunctions done at onsetof devolution,whichhasbeen the basisforequitableshareovertheyears.
• 17.Developmental needsof theCountyGovernmentsand their ability toperform thefunctions assigned tothem:CountyGovernments areallocatedequitableshareofrevenuewhichisanunconditional allocation'to enablecounties have autonomy to plan,budget and implementdevelopmentprojectsbasedoncountyprioritiesandaccount for the same.In addition,Article 209 of the Constitution has assigned counties revenue raising powers and as such counties are expected to improve andmaintain sustained collection of their own sourcerevenues.
• 18.Additionally,the equitable share to County Governments is proposed toincrease from a base of Kshs. 387.4 billion in financial year 2024/25toKshs.405.1billioninfinancialyear2025/26,anincreaseof Kshs.17.6billion,whichismeant tofacilitateCountyGovernments

enhanceservicedeliveryinperformanceoftheir assignedfunctions under PartIIoftheFourthScheduleoftheConstitution.

20. Thus, the proposed vertical division of revenue proposed in the Division of Revenue Bill,2025,therefore,takes into account the cost of CountyGovernments'developmentalneedsanditisexpected thatCounty Governmentswillhavetheabilitytoperform thefunctionsassignedand transferred to them as contemplated under Article 203(1)(f).

19.Itshouldbenotedthat,inordertoachievebalancebetween priority development and performance of the assigned functions,the Third Basisforhorizontal revenue sharing ispremisedoneightparameters whichrelatetodevolvedfunctionsassigned toCountyGovernmentsin PartIIoftheFourthScheduleoftheConstitution.

21.Economic Disparities within and among counties and the need toremedy them:Allocation of the sharable revenue(i.e.,equitable share of Kshs.405.1 billion) among County Governments is based on the Third-generationformula approvedbyParliamentinSeptember2020 pursuant to provisions of Article 217 and paragraph 16 of the Sixth Scheduleof the Constitution.TheThirdBasisformulawhich is applicable fromfinancialyear2020/21tofinancialyear2025/26has takeninto account the following parameters; (i) Population (18%); (ii) Health Index (17%);(i) Agriculture Index (10%);(iv) Urban Index (5%);(v)Poverty Index (14%); (vi) Land Area Index (8%); (vi) Roads Index (8%), and; (vi)Basic Share index (20%).The horizontal distribution of County Governments' equitable revenue share allocation of Kshs. 405.1 billion for financialyear2025/26shallbebasedontheThirdBasisFormula.Noting the equity and sectoral parameters outlined above,the Third basisformula applied in financial year 2025/26, takes into account disparities among countiesand aimsatequitabledistributionofresourcesacrosscounties.

23.Need for Economic Optimization of Each County:Allocation ofresourcesto CountyGovernmentswasguidedbythehistorical costing ofexpendituresfor functions assigned totheCountyGovernments.The equitableshareofrevenueallocatedtoCountyGovernmentsinthe financialyear2025/26isKshs.405.1billion,an allocationwhichisKshs.

22.Further,Kshs.10.6billionhasbeenset asidefor theEqualization Fund in financial year 2025/26, which for purposes of Division of Revenue infinancialyear 2025/26includesKshs.7.9 billion as 0.5per centofthelast audited andapprovedactualrevenuesforfinancialyear 2020/21 (i.e.,Kshs.1,570,563 million); and the balance of Kshs.2.7 billion which is the contributionof arrears towards theFund.The Equalisation Fund is used to finance development programmes that aim at reducing regional disparities among beneficiary counties.

17.6 billion higher than the allocation of Kshs. 387.4 billion for financial year 2024/25. This is anunconditional allocationwhich meansthat the County Governments can independently plan, budget and spend the funds. With theresources,therefore,County Governments are able toprioritize projects and allocate resources, thus optimizing their potential for economicdevelopment.

24.StableandPredictableAllocations of County Governments Vertical Share ofRevenue:TheCounty Governments'equitableshare of revenueraisednationallyhasbeenprotectedfromreductionsthatmaybe of the effects of projectedglobal economic downturn in2025.According to Clause5of theDivisionof RevenueBill(DoRB)2025,theNational Government will bear any shortfall in revenue raised nationally.

25.Need for Flexibility in Responding to Emergencies and Other TemporaryNeeds:TheNationalGovernmentequitableshareofrevenue has an allocation of Kshs. 5 billion for the Contingencies Fund established pursuant toArticle 208of theConstitution.ThisFundwill beused tomeet the demands arising from urgent and unforeseen needs in all Counties that suffer from calamities in the manner contemplated under sections 19 - 21 of the Public Finance Management Act (Cap.412A).In addition,the Public Finance Management Act (Cap. 412A) requires each County Government to set up a County Emergency Fund. County Governments are, therefore, expected to set aside budgets to respond to emergency functions.

26.It should benoted that after takingintoaccount all the other factors contemplatedunder Article203(1)of the Constitution,including the needs of County Governments,there are no resources left to finance other National Government needs,such as defense,roads,energy among others.Infact,theNational Government is leftwith a deficit amounting to KSh.64.6billion tofinanceneedsof othernon-discretionary expenditures such assalaries of National Government staff. Tobridge thisfinancing gap, the National Government will require additional borrowing which maynegativelyimpact onthefiscal consolidationplan.

SummaryofDeviationsfromtheRecommendationsofthe CommissiononRevenueAllocations

27.The Division of Revenue Bill, 2025 proposes to allocate county governments an equitable share of Kshs.405.1billion from the shareable third basis formula for sharing revenue approved by Parliament under Article217oftheConstitution.TheCRA,ontheotherhand,recommends County Governments' equitable share of revenue of Kshs.417.4 billion as anunconditional allocationtobeshared among countygovernments on theproposedfourthbasisformulafor sharing revenuesubmitted to ParliamentforconsiderationandapprovalpursuantArticle217ofthe Constitution.

28. The difference between the proposed allocation by the National Treasury and CRA is occasioned by: - 2. (a)AdjustmentforRevenueGrowth:-WhiletheNational Treasury has proposed an increase of Kshs. 17.6 billion to county governments'equitable share,theCRA hasproposed anincrease of Kshs.30.0billion, in FY 2025/26,resulting into a difference of Kshs.12.4 billion; and 3. (b)Assumptions Used in Arriving at the Respective Shares:Both the National Treasury and the CRA have made varying assumptions in arriving at the respective proposals on County Equitable Share for FY 2025/26, as discussed in paragraph 29 for the National Treasury; and paragraph 30for the CRA.

Table 3: Comparison of approaches towards recommendations of the Commission onRevenueAllocation and theNational Treasury on the equitableshareofrevenueproposed2025/26FinancialYear

Table 3 analyses the approaches by CRA and the National Treasury in computingtheproposal onthedivisionof revenuebetween thenational and county governments in FY 2025/26.

| ExpenditureItem | CRA | National Treasury | Variance C=(A- | |--------------------------------------|------------|---------------------|------------------| | 1.EquitableRevenue Share inFY2024/25 | A(million) | B(million) | B(million)) | | | 387,425 | | | | Add: | | 387,425 | 387,425 | | 2.IncreaseinRevenueAllocation | | | | | | 30,000 | | 12,366 | | | | | 12,366 | | | | 17,644 | | | | 417,425 | | | | TOTALEQUITABLEOFREVENUE=(2+3) | | | | | | | | 405,069 |

AssumptionsUsedinArrivingat theRespectiveShares

Source:TheNational Treasury

29. In arriving at the allocation of Kshs. 405.1 billion, the National Treasurywas informed by the following economic assumptions: 2. (i) TheEqualizationFund arrears tobefinanced from theNational Government'sshareofrevenue; 3. i1 That there willbe nomajor economic shocks negatively affectingforecastedrevenueinfinancial2025/26;

• (ii) That Ordinary revenues projected at Kshs. 2,835 billion (14.7 % of GDP) from Kshs. 2,631.4 billion (14.6% of GDP) in financial year2024/25is attainable;
• (iv) That there shall be stability in interest rates and foreign exchange rates;
• (v) Thatinflationshallremainstablewithin thegovernmenttarget of 5±2.5 percent;
• (vi) That there shall be a steady GDP growth momentum with a projection of 5.3 percent in 2025; and
• (vii) ThatCountyGovernmentswill continue toenhance their Own SourceRevenuestoreduceoverrelianceonnationaltransfers andimprove theirfiscal sustainability.
• 30.In arriving at the allocation of Kshs. 417.4 billion, the CRA was informed by the following factors:
• (a) The need to ensureadequateresources for counties toperform assigned functions
• (b) To provide for counter-part funding of shared commitments for County aggregated parks and community health promoters
• (c) Theneed toensure CountyGovernments are abletomeet financialobligations ofnon-discretionary commitments such as Housing Levy and Universal Health Coverage
• (d) The need to ensure no County gets lower allocation than that for FY 2024/25 upon the application of the fourth basis revenue sharingamongcounties.
• (e)Predictableandstable allocation toCountiesinlinewithArticle 203 (2)(c)&j
• (f)Meeting of National Governmentprovisionsfor NationalDebt and obligations under Article 203 (1) (b).

Conclusion

• 31.The proposals contained in the Bill take into account the financial sustainabilityagainst thebackdrop of escalating expenditurepressure on thefiscalframeworkoccasionedbyanincreaseinConsolidatedFund Services (CFS) and the persistent underperformance of ordinary revenue. As demonstrated above, any increase in county allocation beyond the Kshs. 405.1 billion proposed by the National Treasury will necessitate

additionalborrowing thusleading todeterioration of Kenya'sdebt sustainabilityposition.

32. The proposed equitable share allocated to County Governments in theDivisionof RevenueBill,2025hasalsotakenintoaccount the approved Third Basis Formula for Revenue Allocation. The proposed Kshs. 405.1 billion allocations among County Governments pursuant to Article 217 of the Constitution is equivalent to 25.8 percent of the audited and approvedactualrevenueforfinancialyear2020/21.Thisis above15 percentminimumthresholdrequiredunderArticle203(2)of the Constitution.

I certify that thisprinted impression is a true copy oftheBill passed by the National Assembly on the 9thApril, 2025.

ClerkoftheNationalAssembly

EndorsedforpresentationtotheSenatein accordancewith theprovisions ofStandingOrder142oftheNationalAssemblyStandingOrders.

etaugua

SpeakeroftheNationalAssembly