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William Ruto: Kenya to borrow more after finance bill is withdrawn
Image source, Getty Images
Image caption: Kenyan police have been accused of being brutal in dealing with protestersArticle information
- Author, Basillioh Rukanga
- Paper, BBC News, Nairobi
- 1 July 2024, 12:19 BST
Updated 2 hours ago
Kenyan President William Ruto says the country will have to borrow more to keep the government running, following the rejection of a hugely unpopular finance law that would have raised more money in taxes.
The president said he would withdraw the bill containing controversial tax increases last Wednesday, following deadly protests that led to parliament being set on fire.
But on Sunday he said the bill’s withdrawal had set the country back two years, as he explained the difficulty of being unable to raise extra taxes while facing a huge debt burden.
He said this meant Kenya would have to borrow one trillion shillings ($7.6bn; £6.1bn) just “to be able to run our government”.
This represents a 67% increase over what was planned.
But he also said he was considering spending cuts across government, including in his own office, as well as reducing funding for the judiciary and county governments.
Many protesters opposed the tax increases, saying the extra money would be wasted.
The extra taxes were expected to raise about 350 billion Kenyan shillings, while about 600 billion would be borrowed.
According to the president, the proposed fiscal measures were part of efforts to cut the debt burden of more than $80bn (£63bn). About 60% of Kenya’s collected revenue goes towards debt servicing.
“I have worked very hard to get Kenya out of the debt trap… It’s easy for us as a country to say, ‘Let’s reject the finance bill’. That’s good. And I graciously said we will abandon the finance bill. finance law, but this will have enormous consequences,” said the president when speaking to journalists on Sunday night.
Ruto said rejection of the budget would affect the employment of 46,000 secondary school teachers who are on temporary contracts, as well as the provision of healthcare.
He said the government would be unable to support dairy, sugarcane and coffee producers, including paying off debts of their factories and cooperative societies, as had been planned.
However, he said he was considering issues raised by those who opposed the finance bill, such as cutting spending for his office and dismantling the budgets of the first lady and the wife of the deputy speaker.
The president’s latest comments on more borrowing have come under fire, with economist Odhiambo Ramogi telling the BBC it was neither necessary nor prudent to borrow more as it would put Kenya in “a greater position of debt”.
He said the president’s comments about spending cuts did not demonstrate commitment, given that he had signed the spending plans into law last week.
He said lawmakers would “absolutely” need to review the budget.
There was a similar discussion on social media.
“Why do we need to borrow one billion shillings and yet we cannot employ the 46,000 teachers whose budget is 18 billion shillings?” a Kenyan asked in X (formerly Twitter).
Despite the withdrawal of the finance bill, anger against the government continues, with more protests planned for this week.
Protesters are demanding more accountability from the government, with some calling for the president to resign.
They are also offended by what they see as the government’s insensitivity to their plight and accuse the police of responding brutally to the protests.
At least 23 people died and many others were injured, according to a doctors’ association.
On Sunday, the president said police “did the best they could.”
“If there is any excess, we have mechanisms to ensure that [they] are treated,” he said.
More BBC stories on taxes in Kenya:
Image source, Getty Images/BBC