Kenya to borrow about $1.3 billion to compensate for tax bill
Kenya’s National Treasury will slash expenditure and take on more loans to compensate for revenue plans it was forced to abandon.
The government had planned to introduce new taxes to help raise 346 billion shillings ($2.7 billion) in the fiscal year that began on July 1. It scrapped that plan after protests that led to the deaths of at least 41 people.
Instead, the Treasury will reduce expenditure by 177 billion shillings and borrow the balance, President William Ruto said in a live address on Friday.
“We would be proposing to the National Assembly a budget cut of not the entire 346, but a budget cut of 177 billion and borrowing the difference” Ruto said. “Cutting the entire amount in our assessment would significantly and drastically affect the delivery of critical government services, while borrowing the whole amount in full will occasion a fiscal deficit by a margin that would have significant repercussions on many sectors, including our exchange rate and interest rates.”
The revenue shortfall will increase the budget deficit for 2024-25 to 4.6% of gross domestic product, compared with an earlier estimate of 3.3%, Ruto said. The president also said he’d appoint a panel to carry out a forensic audit of the nation’s debt.
