William Ruto: Kenya to borrow more after finance bill is withdrawn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 their handling of protestersArticle information

• Author, Basillioh Rukanga
• Function, BBC News, Nairobi

• July 1, 2024

Kenyan President William Ruto says the country will have to borrow more to keep the government running after the rejection of a deeply unpopular finance bill that would have raised more money in taxes.

The president said he would withdraw the bill containing controversial tax hikes last Wednesday after deadly protests that led to parliament being set on fire.

But on Sunday he said abandoning the bill had set the country back two years, explaining the difficulty of not being able to raise extra taxes and facing a huge debt.

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 had been planned.

But he also said he was considering spending cuts across the 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 Kenya’s debt burden of more than $80bn (£63bn). Around 60% of Kenya’s revenues go towards debt servicing.

“I have been working very hard to get Kenya out of the debt trap… It is easy for us as a country to say, ‘Let’s reject the Finance Bill.’ That is fine. And I have graciously said we will reject the Finance Bill, but that will have huge consequences,” the president said while speaking to reporters on Sunday evening.

Mr Ruto said the rejection of the budget would affect the employment of 46,000 secondary school teachers who were on temporary contracts, as well as the provision of healthcare.

He said the government would not be able to support milk, sugarcane and coffee producers, including paying off debts of their factories and cooperatives, as had been planned.

However, he said he was considering issues raised by those opposing the finance bill, such as cutting spending for his office and canceling budgets for the first lady and the vice president’s wife.

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 trillion shillings and still not be able to 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 outraged by what they see as the government’s insensitivity to their plight and accuse police of responding brutally to the protests.

At least 23 people were killed and many others were injured, according to a doctors’ association.

On Sunday, the president said police “did the best they could.”

“If there are excesses, we have mechanisms to ensure that [they] are treated,” he said.

More BBC stories on taxes in Kenya:

Image source, Getty Images/BBC

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