Kenya to cut spending by nearly 2% in revised budget
The Kenyan government has announced plans to reduce its 2024-25 spending by 1.9% and widen the fiscal deficit to 3.6% of GDP following the rollback of tax hikes due to widespread protests.
The revised budget aims to address a $2.7 billion budget gap caused by the withdrawn tax increases, with proposed spending cuts and additional borrowing.
President William Ruto, responding to protests demanding his resignation and reforms, dismissed nearly his entire cabinet and promised a more inclusive government.
The protests erupted in reaction to the proposed tax hikes outlined in the Finance Bill, leading to public outcry and demonstrations in Nairobi and other parts of the country.
To mitigate the financial shortfall, the supplementary budget will be debated by lawmakers next week. The revised budget outlines a total spending of 3.87 trillion Kenyan shillings ($30 billion), down from the initial 3.99 trillion.
Recurrent expenditure is set to drop by 2.1%, while development expenditure will see a significant reduction of 16.4%.
Despite retracting the tax hikes, the government has increased the road maintenance levy to 25 shillings per litre of fuel, up from 18 shillings. This move aims to generate additional revenue to support infrastructure projects and maintenance.
President Ruto faces mounting pressure from international lenders, including the International Monetary Fund (IMF), to cut deficits while managing a population grappling with high living costs.
The IMF is closely monitoring Kenya’s recent economic developments and will adjust its approach based on the country’s fiscal policies and economic conditions.
Source: Africanews
