PREVIEW
The government will borrow more to keep the running after it scrapped the hated Finance Bill
The government will cut its budget by 177 billion shillings (US$1.4bn) over the next 12 months and borrow the rest of the KSh346bn ($2.7bn) in tax revenue that it was going to rise in the rejected Finance Bill, President William Ruto told Kenyans in a national broadcast on 5 July.
The latest round of tax hike had to be abandoned in the wake of the Generation Z protest against the Finance Bill. It had become clear the protestors movement would not tolerate even a watered-down version of the Bill (AC Vol 65 No 14, How the fiscal squeeze threatens the patronage machine & Youth revolt wins after Ruto scraps finance bill and pledges talks).
It isn’t clear what form the borrowing will take. The IMF has already lent more than $5bn to Kenya. It and its conditions have been lambasted by the protestors and economists for prescribing higher taxes despite the threat of public unrest. That puts Ruto in a strong position to go back to the Fund for a top up.
For now, Ruto’s government is struggling to get a grip on public opinion. His announcement of an independent task force to audit Kenya’s debt burden has a credibility problem.
Law Society of Kenya (LSK) President Faith Odhiambo, one of the most influential critics of the government’s handling of the protests, declined her appointment to the task force.
The LSK says the task force is unconstitutional. It argues the mandate to conduct public audits rests with the office of the Auditor General.
Activists in the Gen Z movement are evaluating their tactics in the second stage of their campaign which has shifted from opposition to the Finance Bill to a broader plan to replace Kenya’s political class. A well-organised free public concert in Nairobi’s Uhuru Park on 7 July was attended by over 10,000 people and conducted peacefully.
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