Kenyan President William Ruto says the country will have to borrow more to keep the government running after a hugely unpopular finance bill aimed at raising more tax revenue was rejected.
The president said he would withdraw a controversial tax hike bill last Wednesday after deadly protests set parliament ablaze.
But on Sunday, he said the bill’s repeal had set the country back two years, as he explained the difficulty of not being able to raise more taxes while facing a huge debt burden.
This would mean Kenya would have to borrow one trillion shillings ($7.6 billion) just to “be able to run our government,” he said.
This is a 67% increase compared to the plan.
But he also said he was considering spending cuts across the government, including his office, as well as cuts to allocations to the judiciary and county government.
Many protesters opposed the tax increase, saying the extra money would be wasted.
The additional taxes are expected to raise about 350 billion Kenyan shillings, while about 600 billion will be borrowed.
According to the president, the proposed tax measures are part of efforts to cut a debt burden of more than $80bn (£63bn). About 60% of Kenya’s revenue is used to repay debt.
“I have worked very hard to get Kenya out of the debt trap… As a country, it was easy for us to say, ‘Let’s reject the finance bill.’ That’s fine. And I have kindly said we will reject the finance bill, but it will have very big consequences,” the president said while speaking to journalists on Sunday evening.
Mr Ruto said rejecting the budget would affect the employment of 46,000 secondary school teachers working on temporary contracts, as well as the provision of healthcare services.
He said the government would not be able to support dairy, sugar and coffee farmers, including paying off debts of their factories and cooperatives as planned.
However, he said he was considering issues raised by opponents of the finance bill, such as cutting his office’s spending and eliminating funding for the First Lady and her wife. vice president.
The president’s latest comments on borrowing more have been met with criticism, with economist Odhiambo Ramogi telling the BBC that borrowing more is not necessary or prudent as this would put Kenya in a “situation”. It’s more difficult in terms of debt.”
He said the president’s statement on spending cuts lacks commitment because he signed the spending plan into law last week.
He said lawmakers “absolutely” need to amend the budget.
There are similar discussions on social media.
“Why do we have to borrow one trillion shillings and still not recruit 46,000 teachers with a budget of 18 billion shillings?” a Kenyan asked on X (formerly Twitter).
Despite the finance bill being withdrawn, anger against the government continues and more protests are planned this week.
Protesters are demanding more accountability from the government, with some calling for the president to resign.
They also resented what they saw as government insensitivity to their plight and accused the police of responding brutally to the protests.
At least 23 people were killed and many others injured, according to the doctors’ association.
On Sunday, the president said police were “doing everything they could.”
“If there is any overshoot, we have mechanisms in place to ensure that [they] resolved,” he said.
