Tough times ahead, as Kenya’s Ruto proposes austerity measures after 39 killed in protests

NAIROBI – Kenyan President, William, on Friday proposed spending cuts and additional borrowing in roughly equal measure to fill a nearly US$2.7 billion budget hole caused by his withdrawal of planned tax hikes in the face of nationwide protests.

Ruto scrapped the finance bill containing the tax increases in response to mass, youth-let demonstrations, that had created the biggest crisis of his two-year-old presidency.

At least 39 people were killed in clashes with the police and some demonstrators briefly stormed parliament last week, according to Reuters.

Ruto said in a televised address that he would ask parliament for spending cuts totalling 177 billion shillings (US$1.39 billion) for the fiscal year that began this month and that the government would increase borrowing by about 169 billion shillings.

Austerity measures would include the dissolution of 47 state corporations, a 50 percent reduction in the number of government advisers, the suspension of non-essential travel by public office bearers and the removal of budget lines for the president and deputy president’s spouses, Ruto said.

“I believe these changes will set out our country on a trajectory towards economic transformation,” Ruto said.

The president had been caught between the demands of lenders such as the International Monetary Fund (IMF) to cut deficits and a hard-pressed population reeling from rising living costs.

Analysts had said the bill’s withdrawal was likely to result in Kenya missing targets in its IMF programme, although the government did not have debts coming due for which it urgently needs cash.

Kenya’s budget deficit is now projected at 4.6 percent of gross domestic product in the 2024/25 financial year, up from an earlier estimate of 3.3 percent, according to Ruto.

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