Kenya: Ruto’s Budget Cuts After Protests Over Tax Hikes

Kenyan President William Ruto is facing a tough economic situation. This follows widespread protests against planned tax increases. After these protests, the finance bill was withdrawn. This bill included the tax increases. Ruto now suggests cutting spending and borrowing more. This is to fix a budget gap of about $2.7 billion [Source needed]. The finance bill’s withdrawal aimed to calm public anger. However, it created a large hole in the budget. This makes these big changes necessary. The protests also led to at least 39 deaths [Source needed]. Some protesters even briefly entered parliament. This shows how strong the public anger is. According to Africanews.com, President Ruto hinted at budget changes because of the protests (https://www.africanews.com/2024/06/25/kenya-president-ruto-hints-at-budget-cuts-amid-protests/).

Proposed Austerity Measures

Ruto plans to ask parliament to approve spending cuts. These cuts would be 177 billion shillings ($1.39 billion) for this fiscal year [Source needed]. He also wants to borrow 169 billion shillings more [Source needed]. These actions are to fix the growing budget problem. Kenya’s budget problem is now predicted to be 4.6% of the GDP in the 2024/25 financial year [Source needed]. This is much higher than the previous 3.3% [Source needed]. This change shows how serious the money situation is. It also shows the need for quick action. The Council on Foreign Relations gives context on these protests. They also link them to the proposed tax increases (https://www.cfr.org/africa-center/kenya).

The planned cuts are big and will affect many government areas. For example, 47 state companies may close. The number of government advisors may be cut by 50% [Source needed]. Public officials may stop non-essential travel. Also, budget money for the president and deputy president’s spouses may be removed. These cuts show a promise to lower government spending and make things simpler. The success of these cuts depends on using them well. It also depends on the government handling the social and economic effects.

Economic Vision and Debt Audit

Ruto thinks these changes will help the country’s economy. He also said there will be a full review of the national debt. The debt is said to be over 70% of the GDP [Source needed]. This review will help understand the country’s debts. It will also look for any possible problems. More government changes are expected soon. This suggests a larger plan for improvement. The president wants a more stable economy. However, reaching this goal will be hard. The World Bank’s Kenya Economic Update has information on Kenya’s economic problems (https://www.worldbank.org/en/country/kenya/publication/kenya-economic-update).

Continued Protests and Public Reaction

Even though Ruto rejected the finance bill, protests continue. Protesters want the president to resign. Fewer people may be protesting now [Source needed]. However, some activists want to rethink their approach. This is after violent events and looting during Tuesday’s protests. The ongoing unrest shows deep public unhappiness. It also shows the need for more inclusive government. The government must fix the protesters’ concerns to bring back stability and trust.

The proposed cuts have caused much debate. This is true in Kenya and among international observers. President Ruto says these steps are needed to stabilize the economy. He also says they will lower the country’s debt. However, critics worry about the effects on vulnerable people. They also worry about the effects on important public services. For example, closing state companies could cause job losses. It could also reduce access to resources in some areas. Also, cutting government spending on healthcare and education could worsen inequality. It could also hurt long-term growth.

Ruto’s plan will only work if the government handles the changes well. They must also reduce the bad effects of the cuts. The review of the national debt is a key step for openness. Knowing the details of Kenya’s debt will help the government make good choices. It will also help them negotiate better terms with lenders. This review could also find problems in past borrowing. This could lead to more changes and ways to prevent issues.

People in Kenya and other countries will watch the review’s results closely. It will give important information about the country’s money situation. It will also show if Kenya can pay its debts. The government must be open during this process. This will build trust in its economic plans. This trust is important for keeping stability and attracting investment. The government’s actions in the next few months will shape Kenya’s long-term economy.

Conclusion

President Ruto wants to cut the budget and borrow more. This is to fix Kenya’s growing budget problem after protests. Whether these cuts and the debt review work will decide the country’s future. It will also restore public trust. The coming months will be important for seeing how these plans are used and what happens.