President William Ruto has warned that the mounting debt in Kenya is expected to increase following violent protests that led to the rejection of a finance bill crucial for generating revenue. He cautions that this will have significant repercussions.
Despite public demand for his resignation, Ruto has announced the government’s plan to reduce a $2.7 billion budget deficit by 50% and secure the remaining through borrowing without specifying the sources.
In response to the protests driven by discontent over the inflated government bureaucracy and lavish lifestyles of high-ranking officials, Ruto has pledged to implement funding cuts in his office. This significant step towards fiscal responsibility is a reassurance to the public. Additionally, he stated that funding for the offices of the first lady, the “second lady” (wife of the vice president), and the wife of the prime Cabinet secretary will be discontinued. Furthermore, nearly forty state-owned enterprises with overlapping functions will be shuttered.
Ruto’s popularity has significantly waned during his two-year tenure due to his efforts to introduce taxes aimed at facilitating the repayment of Kenya’s $80 billion public debt owed to creditors such as the World Bank, the International Monetary Fund, and China. The public debt now accounts for approximately 70% of Kenya’s gross domestic product, the highest in two decades.
The primary concern is how Ruto’s administration will secure the funds to repay the debt without further inciting the millions of struggling Kenyans or impeding the country’s economic growth.