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In his first State of the Nation address since coming to power last year, the President said that tough measures were necessary to get the country back on track
Kenya’s President William Ruto defended his tough economic measures while addressing the Nation. In his first State of the Nation address since coming to power last year, the President said that tough measures were necessary to get the country back on track. Removal of fuel and food subsidies did not go well with the people who were struggling against inflation and the steady erosion of the value of their local currency against the Greenback. The present regime also introduced new taxes to mop up resources on the plea of committing more resources for development works.
Kenya is facing several economic problems on account of external and domestic reasons. The COVID-19 pandemic sapped the country’s resources, which was followed by the ongoing Russia-Ukraine war. Like many other countries in Africa, Kenya was mainly dependent on grain imports from Russia and Ukraine. The present stalemate stemming from the Israel-Palestine conflict will have its impact on the fragile Kenyan economy. Ruto also pointed out that the country has been facing fiscal profligacy since it was living much beyond its means, thereby accumulating huge debt to be paid off, which is presently pegged at US$66 billion as of the end of June this year. This works out to around two-thirds of gross domestic product.
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The government is spending about half of its revenue on debt-servicing, but he said that progress was being made. Ruto assured the citizens that his government was committed to stabilizing the situation. The reform measures, he added, have yielded progress. Next month, in December, the East African country will be able to settle the first Kenya shillings, US $300 million or US$ 500 billion Kenya shillings installment of the 2 billion euro bond debt before the due date. Significantly, in July, Kenya went down in Fitch Rating. In July, global credit ratings agency, Fitch Ratings, downgraded Kenya’s ability to repay international lenders from stable to negative, citing tax hikes and social unrest.
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