In an attempt to close a nearly USD 27 billion budget deficit created by his decision to back out of planned tax increases in the face of widespread opposition (as protesters stormed Kenya’s Parliament, as demonstrations against planned tax increases got out of hand, amid a heavy-handed police and military presence), Kenyan President William Ruto suggested spending reductions and further borrowing in roughly equal amounts.
In response to widespread protests led by young people that have produced the largest crisis of his two-year presidency, William Ruto discarded the finance bill that included tax increases.
During the African government’s fiscal year, which started in July 2024, William Ruto said in a televised speech that he would ask Parliament for spending cuts totalling 177 billion shillings (USD 1.39 billion) and that the government would increase borrowing by roughly 169 billion shillings.
Kenya President William Ruto finds himself torn between a beleaguered populace reeling from soaring living expenses and lenders like the International Monetary Fund pressuring him to reduce deficits.
According to analysts, the withdrawal of the bill is likely to cause Kenya to fall short of its IMF programme targets even though the government does not have any outstanding debts that require immediate payment.
According to William Ruto, the budget deficit for Kenya’s 2024–2025 fiscal year is now predicted to be 4% of GDP, up from an earlier estimate of 3%.
He said that the austerity measures will involve the dissolution of 47 state corporations, a 50% decrease in the number of government advisers, a suspension of public office bearers’ non-essential travel, and the elimination of budget lines for the spouses of the president and deputy president.
“I believe these changes will set our country on a trajectory towards economic transformation,” William Ruto said.
In addition, he declared that he would soon make announcements regarding changes to the government and announced a forensic audit of the nation’s debt, which accounts for over 70% of GDP.