Kenyan President William Ruto announced on Friday that he plans to address a nearly $2.7 billion budget deficit through a combination of spending cuts and additional borrowing. This gap arose after he withdrew planned tax hikes in response to widespread protests. Ruto scrapped the finance bill containing the tax increases following mass, youth-led demonstrations, which have posed the most significant challenge to his presidency so far.
At least 39 people were killed in clashes with police, and some demonstrators briefly stormed parliament last week. In a televised address, President Ruto announced that he would request parliament to approve spending cuts totaling 177 billion shillings ($1.39 billion) for the fiscal year that began this month.
Furthermore, the government plans to increase borrowing by about 169 billion shillings. President Ruto is facing pressure from lenders like the International Monetary Fund to reduce deficits while also addressing the needs of a population struggling with rising living costs.
Ruto’s withdrawal of the bill is likely to result in Kenya missing its IMF program targets, according to analysts, although the government does not face immediate debt obligations requiring urgent cash.
He stated that the budget deficit is now projected at 4.6% of gross domestic product for the 2024/25 financial year, up from the earlier estimate of 3.3%.
