President William Ruto made a significant decision last Wednesday by withdrawing a finance bill containing 346 billion Kenyan shillings in tax increases, following violent protests that left at least 24 people dead. In his announcement, Ruto mentioned the need for austerity measures to address the country’s fiscal deficit.
However, in a recent interview, Ruto revealed that the government would now have to borrow an additional 346 billion shillings to cover the deficit, pushing total borrowing for the fiscal year to nearly 1 trillion shillings. This decision comes as Kenya’s national debt already exceeds the legal limit of 55% of GDP.
Finance Minister Njuguna Ndung’u highlighted the importance of expenditure cuts to manage the country’s debt burden. He mentioned that the government’s plan would be clearer once Parliament approves the supplementary budget, although Parliament is currently on recess.
Ruto’s call for a supplementary budget reflects the government’s efforts to manage the country’s finances amidst widespread economic challenges. With borrowing set to increase, Kenya faces tough decisions ahead in ensuring financial stability and addressing the growing debt burden.