Government collects sh2.39 trillion Revenue in August 2025

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The government collected sh2.39 trillion in tax revenue in August 2025, falling short of the monthly target of sh2.48 trillion by sh91.14 billion.

While overall collections continue to show growth compared to the same period last year, the shortfall highlights challenges in key tax streams, including Value Added Tax (VAT), excise duties, petroleum duties, and customs on imported goods.

At the same time, government expenditures edged above planned levels, reflecting delayed payments from the previous month and increased spending across employee compensation, goods and services, and grants to local governments and institutions.

Cumulatively, since the start of the 2025/26 financial year, tax collections have totalled sh4.63 trillion against a target of sh4.733 trillion, leaving a gap of sh106.71b. Despite these shortfalls, the government’s tax revenue still recorded a 7.6% growth compared to the same period in the previous financial year, demonstrating resilience amid challenges in both domestic and international trade-related taxes.

According to performance of the economy report from the Ministry of Finance for the month of August, the underperformance in August is largely attributed to indirect domestic taxes and taxes on international trade transactions.

For instance, higher input costs among some of the top VAT taxpayers, coupled with lower-than-projected imports, including petroleum products, reduced customs collections. Non-tax revenue also lagged, amounting to sh167.01b against a target of sh256.95b, leaving a deficit of sh89.94b.

On the grants front, the government had projected to receive sh313.28b from development partners in August to support various development projects. Preliminary information shows that only sh38.29b was disbursed during the month; however, this figure is expected to improve as additional data on disbursements becomes available.

Expenditure

Meanwhile, government expenditures for August 2025 reached sh3.15 trillion, 2.1% higher than the programmed sh3.08 trillion. Part of this increase was due to expenses originally intended for July being processed in August, following the completion of pending budget procedures at the start of the financial year.

All major categories of expenditure exceeded planned levels. Compensation of employees rose to sh421.02b, above the projected sh412.77b. Spending on goods and services amounted to sh643.43b, compared to the target of sh589.41b, while grants to local governments, tertiary institutions, and regional hospitals totaled sh835.63b against a plan of sh810.73b.

In terms of development spending, the government allocated sh418.93b in August for the acquisition of non-financial assets, including roads, bridges, and other infrastructure projects. This figure, however, was sh134.21b below the planned sh553.14b, reflecting slower-than-expected progress in capital investment projects.