Kenyan President William Ruto’s government unveiled its maiden budget on Thursday in the face of widespread public anger over proposed tax hikes in a country suffering a severe cost-of-living crisis.
The 3.6-trillion shilling ($25.7 billion) budget for 2023/24 is the first since Ruto took the helm of the East African powerhouse in September last year following a bitterly contested election race.
But many in Kenya are opposed to the plans for a raft of new or increased taxes including on food and fuel that are expected to generate an extra $2.1 billion for the cash-strapped government’s coffers.
And just as Treasury Minister Njuguna Ndung’u began presenting the budget to parliament, lawmakers allied with opposition leader Raila Odinga’s coalition walked out of the chamber in protest at its provisions and the parliamentary timetable for a vote.
Although Ruto pledged on the campaign trail to help poor Kenyans known as “hustlers”, he has been accused of introducing policies that have actually made their lives harder.
Kenyans are already feeling the pinch from soaring prices for basic necessities, along with a sharp drop in the value of the local currency and the worst drought in four decades.
Ruto is seeking to repair a heavily-indebted economy inherited from his predecessor Uhuru Kenyatta, who splurged on major infrastructure projects.
Kenya is now sitting on a public debt mountain of almost $70 billion or about 67 percent of gross domestic product (GDP), and its repayment costs have jumped as the shilling sinks to record lows of more than 139 to the dollar.
“I wish to assure Kenyans and investors that our fiscal positions remain strong and the government remains committed to meet all maturing obligations as and when they fall due,” Ndung’u told MPs.
Economic growth slowed last year to 4.8 percent from 7.6 percent in 2021, reflecting the global fallout from Russia’s invasion of Ukraine and the drought buffeting the vital agriculture sector.
Ndung’u said the economy is expected to expand by 5.5 percent in 2023 “supported by broad-based private sector growth, including continued strong performance of the services sector, recoveries in agriculture and ongoing public sector investments”.
– ‘Significant challenges’ –
The proposed legislation calls for new or increased taxes on items including fuel and food, as well as mobile money transfers, beauty products and digital content.
One of the most contentious provisions is a 1.5 percent levy on the salaries of all tax-paying Kenyans to fund an affordable housing programme.
Odinga’s Azimio alliance had on Wednesday described the budget as “deeply flawed” and said it “prolongs and worsens the suffering of the people”.
Earlier this year, the opposition staged several anti-government protests over the cost of living crisis which degenerated into sometimes deadly street clashes between police and demonstrators.
An opinion poll published in the leading newspaper Daily Nation on Wednesday found that 90 percent of Kenyans were opposed to the finance bill.
The International Monetary Fund (IMF) has nevertheless hailed the government for responding “promptly” to the economic challenges it faces and for “prudent” spending.
In May, the IMF said it had reached a preliminary agreement with Kenya that would provide the government with access to another $1 billion in credit — increasing its total commitments to $3.52 billion.
While the agency said it had a favourable medium-term outlook for the Kenyan economy, “significant challenges remain against the backdrop of slow global economic growth and tight financial conditions”.
© Agence France-Presse