(3 minutes read)
- Kenyan President William Ruto has enacted a contentious new finance bill which will see the introduction of new taxes. There has been fierce criticisms from the opposition and civil society against the Budget
Kenyan President William Ruto has enacted a contentious new finance bill which will see the introduction of new taxes. There has been fierce criticisms from the opposition and civil society against the Budge. The bill will see an increase in VAT on fuel from 8% to 16%, as well as an unpopular payroll levy to finance a low-cost housing program. Initially set at 3%, the levy has been reduced to 1.5%. Importantly, the government withdrew some of the budget’s initial provisions, including a tax on beauty products.
Ruto’s government, which was elected in August 2022, hopes that the finance project will help to rebound Kenya’s heavily depleted coffers. The country’s public debt has reached a high of US$65 billion , or 67% of gross domestic product. As the Kenyan shilling continues to depreciate, repayment is becoming increasingly costly. However, the opposition coalition Azimio, led by Raila Odinga, accuses Ruto of reneging on his election promises to improve living conditions for Kenyans.
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Between March and May, the coalition organised anti governmental marches which killed three, according to authorities. The International Monetary Fund (IMF) praised Ruto’s government at the end of May for responding promptly” to the economic challenges, in a press release announcing a US$1 billion loan to Kenya. The medium-term outlook is favourable for the Kenyan economy. However, significant challenges remain against the backdrop of slow global economic growth and tight financial conditions.
