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Kenya’s President William Ruto announced Sunday June 30, 2024 that the country will need to borrow an additional one trillion shillings to keep the government operational following the rejection of a controversial finance bill. This move follows deadly protests and the burning of the parliament building last week, which forced the president to withdraw the bill that aimed to increase taxes.
President Ruto explained that abandoning the finance bill, which included significant tax hikes, has set the country back by two years. He stressed the difficulty of not being able to raise extra taxes while managing a substantial debt burden. The planned borrowing represents a 67% increase over what was initially projected.
In his address, the president also mentioned potential spending cuts across government sectors, including his own office, as well as reduced allocations to the judiciary and county governments. Many protesters opposed the tax increases, arguing that the additional revenue would be squandered.
The proposed tax measures were expected to generate about 350 billion Kenyan shillings, while an additional 600 billion shillings was planned to be borrowed. President Ruto noted that these measures were part of efforts to alleviate the country’s debt burden, which exceeds $80 billion. Currently, approximately 60% of Kenya’s revenue goes towards servicing this debt.
“I have been working very hard to pull Kenya out of a debt trap,” President Ruto stated. “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 highlighted that the rejection of the budget would impact the employment of 46,000 junior secondary school teachers on temporary contracts and affect healthcare provision. Additionally, the government would be unable to support dairy, sugarcane, and coffee farmers by paying off debts owed by their factories and cooperative societies, as previously planned.
However, President Ruto acknowledged the concerns raised by opponents of the finance bill. He mentioned considering cuts to spending by his office and eliminating budgets for the First Lady and the Deputy President’s spouse.
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