Kenyan President William Ruto has announced plans to borrow an additional one trillion Shillings ($7.6 billion) to address a growing budget deficit after the finance bill aimed at increasing tax revenue was rejected. This decision comes in the wake of deadly protests that erupted last week.
Ruto, during a TV interview on Sunday, highlighted the adverse impact of the bill’s rejection on efforts to manage Kenya’s substantial debt burden. He noted that approximately 60% of the country’s revenue is allocated to debt servicing.
The proposed new taxes, which could have generated about $2.7 billion, were seen as a critical measure to alleviate the financial strain. However, following significant unrest, Ruto withdrew the bill from parliament.
Last week, lawmakers had initially approved the finance bill, but it faced severe backlash as protestors stormed parliament and set parts of it ablaze, demanding that the government tackle corruption and reduce wasteful spending instead of imposing higher taxes. In response, President Ruto has committed to cutting the presidential budget and eliminating non-essential expenditures.
Kenya’s national debt currently exceeds $80 billion, with a substantial portion denominated in foreign currency, further complicating the financial outlook for East Africa’s largest economy.
