Kenya cuts ’25 spending, deficit rises

Kenya’s government plans to cut 2024-25 spending by 1.9 per cent and widen the fiscal deficit to 3.6 per cent of GDP in a revised budget, the treasury announced. This follows mass protests that led to the reversal of proposed tax hikes.

President William Ruto dismissed nearly his entire Cabinet and pledged to form a broad-based government in response to protestors’ demands for his resignation and political reforms.

Ruto proposed spending cuts and additional borrowing to fill a nearly $2.7 billion budget gap caused by the rollback of the tax hikes. Lawmakers will debate the supplementary budget, signed by Principal Treasury Secretary Chris Kiptoo on July 11, when they reconvene.

The budget projects spending at 3.87 trillion Kenyan shillings ($30 billion), down from 3.99 trillion shillings ($31 billion), with recurrent expenditure down 2.1 per cent and development expenditure down 16.4 per cent. Despite the rollback, the road maintenance levy was raised to 25 shillings per liter of fuel.

Ruto faces the toughest crisis of his presidency, balancing the International Monetary Fund (IMF) demands to cut deficits with a population struggling with high living costs. The IMF is assessing recent developments in Kenya and making adjustments.

Attribution: Reuters