According to a report by the British news network, BBC, the president of Kenya; William Ruto, has revealed that the country may have to acquire more loans to keep the government afloat.
This development is a result of the scrapping of a new tax proposal which was soundly rejected by the Kenyan public owing to their skepticism of how the revenue from the tax would be managed.
On Wednesday last week, the president decided to withdraw the proposed tax bill due to the insurmountable pressure being placed on his administration to do so, and the loss of lives that ensued as a result of the protests.
However, during the roundtable discussion, he had with the media on Sunday, he disclosed that the tax withdrawal had set the country two years back, and could lead to more borrowing.
“I have been working very hard to pull Kenya out of a debt trap… It is easy for us, as a country, to say: ‘Let us reject the finance bill.’ That is fine. And I have graciously said we will drop the finance bill, but it will have huge consequences,” the president said.
While the new tax bill would inevitably create significant stress on the average Kenyan and raise the cost of living even further, the money from the tax increase was intended to service the country’s debt.
Ruto mentioned that the proposed tax bills would have cut the debt burden of over $80bn (£63bn). Currently an estimated 60% of Kenya’s collected revenues goes to servicing debt.
The president also stated that Kenya will need to borrow one trillion shillings ($7.6 billion; £6.1 billion) only “to be able to run our government.” This is a 67% increase above what had been intended.
He however disclosed that he was exploring spending cuts throughout government, including in his own office, as well as decreasing payments to the court and county governments.
Furthermore, the Kenyan president stated that the budget’s rejection will affect the employment of 46,000 junior secondary school teachers on temporary contracts, as well as healthcare provision.
He explained that the government will be unable to help dairy, sugarcane, and coffee producers, including the repayment of debts owed by their companies and cooperative organizations, as anticipated.
