Kenya’s government is set to reduce spending by 1.9% for the 2024-25 fiscal year and expand the fiscal deficit to 3.6% of GDP in a revised budget, as announced by the treasury.
This decision follows recent protests that forced the rollback of tax hikes.
President William Ruto, responding to widespread demonstrations, dismissed nearly his entire cabinet and vowed to establish a more inclusive government.
The protests, which began last month against the now-cancelled tax increases, also demanded Ruto’s resignation and significant reforms to combat corruption and improve governance.
In response to the scrapped tax hikes, Ruto proposed spending cuts and increased borrowing to cover a budget shortfall of nearly $2.7 billion.
The supplementary budget, signed by Chris Kiptoo, principal treasury secretary, on July 11 and published on parliament’s website, will be debated and voted on when lawmakers reconvene next week.
The revised budget anticipates total spending of 3.87 trillion Kenyan shillings ($30 billion), down from the initial 3.99 trillion shillings ($31 billion).
Recurrent expenditure is expected to decrease by 2.1%, with development spending seeing a significant drop of 16.4%.
Despite the withdrawal of the tax legislation, the energy regulator recently raised the road maintenance levy on fuel to 25 shillings per litre, up from 18 shillings.
Ruto, facing the most severe crisis of his two-year presidency, is navigating pressures from international lenders like the International Monetary Fund (IMF) to reduce deficits, while also addressing public discontent over the high cost of living.
The IMF has indicated it is assessing recent developments in Kenya and will make necessary adjustments accordingly.
Source-BBC
