Kenya Revamps Budget to Include Spending Cuts After Reversing Tax Increase

Kenya’s government plans to reduce spending by 1.9% for 2024-25 and increase the fiscal deficit to 3.6% of GDP in a revised budget, following a reversal of tax hikes prompted by large-scale protests. President William Ruto dismissed most of his cabinet and vowed to establish a more inclusive government.

Mass protests calling for Ruto’s resignation and reforms to address corruption and governance issues took place. The revised budget, approved by principal treasury secretary Chris Kiptoo, forecasts total spending at 3.87 trillion Kenyan shillings ($30 billion), down from 3.99 trillion shillings ($31 billion).

Recurrent spending is expected to decrease by 2.1%, while development spending will see a 16.4% reduction. The energy regulator raised the road maintenance levy on fuel to 25 shillings per litre, up from 18 shillings. Ruto is confronting the most severe crisis of his two-year presidency, balancing the demands of entities like the International Monetary Fund (IMF) for deficit reduction with a population facing high living costs.