Kenya’s President William Ruto has announced that additional borrowing will be necessary to sustain government operations after a finance bill, aimed at increasing tax revenue, was rejected due to widespread public opposition.
Last Wednesday, the president responded to violent protests, including the burning of parliament, by withdrawing the contentious bill proposing tax hikes.
However, he lamented on Sunday that this decision had effectively set the country’s economic progress back by two years.
He emphasized the challenge of managing a substantial national debt without the ability to implement additional tax measures.
He said this meant Kenya would have to borrow one trillion shillings ($7.6bn; £6.1bn) just “to be able to run our government”.
This represents a 67% increase from the initial plan.
Additionally, he indicated a contemplation of reducing expenditures across various government sectors, including his own office, as well as decreasing allocations to the judiciary and county governments.
Many demonstrators opposed the tax hikes, arguing that any additional revenue would be misused.
The intended tax adjustments aimed to generate approximately 350 billion Kenyan shillings, while borrowing was projected to reach about 600 billion.
President Ruto underscored that these tax proposals were part of a strategy to alleviate Kenya’s substantial debt burden, which exceeds $80 billion (£63 billion). Approximately 60% of the country’s revenue is currently allocated to servicing this debt.
“I have been working very hard to pull Kenya out of a debt trap… It is easy for us, as a country, to say: ‘Let us reject the finance bill.’ That is fine. And I have graciously said we will drop the finance bill, but it will have huge consequences,” the president said while speaking to journalists on Sunday night.
Mr. Ruto expressed concerns that the budget’s rejection would impact 46,000 junior secondary school teachers on temporary contracts and affect healthcare services. He noted that planned government support for dairy, sugarcane, and coffee farmers, including debt payments to their factories and cooperative societies, would be affected.
Addressing criticisms of the finance bill, Mr. Ruto mentioned considering cost-cutting measures in his office and potentially eliminating budgets for the First Lady and the Deputy President’s spouse.
Despite withdrawing the finance bill, public discontent persists, with further protests scheduled for the coming week. Demonstrators are demanding greater government accountability, with some calling for the president’s resignation. They also accuse the government of being insensitive to their grievances and criticize the police for their harsh response to the protests, which resulted in at least 23 deaths and numerous injuries, as reported by a doctors’ association.
On Sunday the president said the police had “done their best they could”.
“If there are any excesses, we have mechanisms to make sure that [they] are dealt with,” he said.