
Kenya Set To Borrow Ksh 1.6B To Compensate For The Withdrawn Finance Bill
Kenya’s National Treasury will cut spending and take on more debt to compensate for revenue plans that had to be abandoned.
The government had planned to levy new taxes to raise 346 billion shillings ($2.7 billion) in the fiscal year that began July 1.
It abandoned the plan following protests that resulted in the deaths of at least 41 people.
Instead, the Treasury will cut spending by 177 billion shillings and borrow the rest, President William Ruto announced in a live address on Friday.
“Cutting the entire amount in our assessment would significantly and drastically affect the delivery of critical government services, while borrowing the whole amount in full will occasion a fiscal deficit by a margin that would have significant repercussions on many sectors, including our exchange rate and interest rates.”
“The revenue shortfall will increase the budget deficit for 2024-25 to 4.6% of gross domestic product, compared with an earlier estimate of 3.3%,” Ruto said.
The president also stated that he would appoint a panel to conduct a forensic audit of the nation’s debt.
The borrowed funds will allow the government to continue hiring tens of thousands of junior secondary school teachers, write off coffee farm debt, maintain a fertilizer subsidy, and settle arrears owed to counties and pensions.
He also stated that the government will dissolve 47 state corporations that serve overlapping functions.
Later, Ruto held a two-hour X Spaces session to interact directly with protesters. The social media platform reports that up to 3.3 million people listened.
The president was questioned on a variety of topics, including protest deaths, including that of a 12-year-old schoolboy, alleged police abductions of protesters, public corruption, unemployment, and the economy.
Taking to X to address his citizens “just shows how bad his communication team is” because social media has been the source of the protests, according to Odanga Madung, a researcher at web browser maker Mozilla.
“He needs to stop all the pandering and respond to Kenyans’ concerns by taking direct action on the issues they are concerned about,” Madung said by phone.
Kenya Set To Borrow Ksh 1.6B To Compensate For The Withdrawn Finance Bill