Kenya’s President William Ruto announced that the country would need to borrow more funds to sustain government operations following the rejection of a highly unpopular finance bill intended to increase tax revenue.
The decision to withdraw the controversial bill came after deadly protests led to the burning of parliament.
President Ruto, addressing the nation on Sunday, stated that dropping the bill had set the country back two years.
He highlighted the difficulty of not being able to raise additional taxes while grappling with a massive debt burden. Consequently, Kenya will have to borrow one trillion shillings ($7.6 billion; £6.1 billion) just to keep the government running, a 67% increase from the initial borrowing plan.
Ruto also mentioned potential cuts in government spending, including reductions in his own office and decreased allocations to the judiciary and county governments.
Many protesters had opposed the tax hikes, arguing that the additional revenue would be squandered.
The proposed taxes were expected to generate approximately 350 billion Kenyan shillings, with another 600 billion to be borrowed.
The measures were part of an effort to alleviate Kenya’s debt burden, which exceeds $80 billion (£63 billion). Currently, around 60% of Kenya’s revenue is used to service this debt.
In his Sunday night address, President Ruto emphasised the challenges of managing the country’s finances without the finance bill.
He noted the potential impacts on employment for 46,000 junior secondary school teachers on temporary contracts and on healthcare services. He also mentioned the inability to support dairy, sugarcane, and coffee farmers as planned.
While considering the issues raised by opponents of the bill, such as reducing spending by his office and eliminating budgets for the First Lady and the deputy president’s spouse, Ruto faced criticism for suggesting more borrowing.
Economist Odhiambo Ramogi argued that additional borrowing would worsen Kenya’s debt distress and criticised the president’s commitment to spending cuts, noting that he had recently signed spending plans into law.
Social media reactions echoed these concerns, with users questioning the need for borrowing one trillion shillings while failing to employ 46,000 teachers, whose budget is only 18 billion shillings.
Despite the withdrawal of the finance bill, public anger persists, with further protests planned. Protesters demand greater government accountability, some calling for the president’s resignation, and criticise the police for their brutal response to demonstrations.
At least 23 people have been killed and many others wounded, according to a doctors’ association. President Ruto defended the police, stating they had done their best and any excesses would be addressed through proper mechanisms.
