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Kenyan President Ruto proposes spending cuts and borrowing to fill budget gap amid protests

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Kenyan President William Ruto announced on Friday a plan to address a nearly $2.7 billion budget deficit by implementing spending cuts and increasing borrowing. This move follows his withdrawal of proposed tax hikes in response to widespread protests.

The finance bill containing the tax increases was scrapped after mass, youth-led demonstrations erupted, posing the biggest challenge to Ruto’s two-year-old presidency. The protests, which led to clashes with the police and the deaths of at least 39 people, saw some demonstrators briefly storming parliament last week.

In a televised address, Ruto revealed that he would ask parliament for spending cuts totaling 177 billion shillings ($1.39 billion) for the fiscal year that began this month. Additionally, the government would increase borrowing by about 169 billion shillings.

This approach aims to balance the demands of international lenders, like the International Monetary Fund, with the needs of a population struggling with rising living costs.

The bill’s withdrawal could result in Kenya missing targets set in its IMF program, although the government does not have immediate debts that require urgent cash. The country’s budget deficit is now projected at 4.6% of gross domestic product for the 2024/25 financial year, up from an earlier estimate of 3.3%, Ruto stated.

Ruto outlined several austerity measures, including dissolving 47 state corporations, reducing the number of government advisers by 50%, suspending non-essential travel for public officials, and removing budget lines for the president and deputy president’s spouses.

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“I believe these changes will set our country on a trajectory towards economic transformation,” he said.

He also announced a forensic audit of the country’s debt, which exceeds 70% of gross domestic product, and indicated forthcoming changes to the government.

X Forum

Following his speech, Ruto hosted a live audio forum on X, engaging with young people who sharply questioned him on police brutality, corruption, and economic policy. Activist Osama Otero, who participated in the protests, recounted being abducted by state security agents and questioned the president on whether Kenya had become a “terrorist country.”

Ruto, who had previously denied police involvement in the reported disappearances, apologized for Otero’s treatment and promised to take action on his case.

Despite Ruto scrapping the finance bill, protests have continued, with many demonstrators calling for his resignation. However, turnout has diminished, and some activists are reconsidering their strategy after recent demonstrations were marred by violence and looting.

Activists blame these incidents on thugs hired by politicians to discredit the movement, while the government attributes the violence to opportunistic criminals.

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