Mia Boykin
Kenya finds itself in a critical economic situation following a week of civil unrest and political upheaval. In an address to the nation on June 26, President Ruto withdrew the controversial finance bill, after the death toll rose in Kenya rose to at least 23 people. This decision forced the government to reassess its fiscal strategies, potentially deepening the country’s debt crisis.
The turmoil began with widespread protests against a proposed finance bill aimed at raising taxes on various goods and services. The unrest reached its peak on June 25 when demonstrators stormed Parliament, resulting in a violent crackdown by police. According to a doctors’ association, at least 23 people were killed in the ensuing chaos.
Faced with international pressure, President William Ruto made a surprising announcement on Wednesday. “Listening keenly to the people of Kenya who have said loudly that they want nothing to do with this finance bill 2024, I concede,” Ruto said. “I will not sign the 2024 finance bill and it shall subsequently be withdrawn.”
However, the economic ramifications of this decision quickly became apparent. In a press interview on June 30th, Ruto revealed the extent of the challenge facing the government. “I have been working very hard to pull Kenya out of a debt trap… It is easy for us, as a country, to say: ‘Let us reject the finance bill.’ That is fine. And I have graciously said we will drop the finance bill, but it will have huge consequences,” he stated.
The president announced that Kenya would now need to borrow an additional one trillion shillings ($7.6 billion US dollars) “just to be able to run our government.” This represents a 67% increase over previous borrowing plans, highlighting the severity of the situation.
Kenya’s economic issues are deeply rooted. The country’s public debt is over $80 billion, with about 60% of collected revenues allocated to debt servicing. The now-withdrawn finance bill was intended to raise approximately 350 billion Kenyan shillings through new taxes, while an additional 600 billion was to be borrowed.
Ruto outlined several potential consequences of the bill’s rejection. The employment of 46,000 junior secondary school teachers on temporary contracts is now at risk. Additionally, planned support for dairy, sugarcane, and coffee farmers may be compromised, including debt relief for their factories and cooperative societies.
The economic situation has sparked broader conversations about government spending and accountability. Many protesters, particularly young Kenyans facing unemployment are demanding more than just the withdrawal of the finance bill. There are calls for increased government accountability, with some even demanding Ruto’s resignation.
In response to these concerns, Ruto has indicated that he is considering cuts in government spending. These potential cuts could affect his own office, the judiciary, and county governments. He also mentioned the possibility of scrapping budgets for the First Lady and the deputy president’s spouse.
Despite these concessions, protests are set to continue. Demonstrators remain frustrated with what they perceive as government insensitivity to their economic struggles. The protests have also raised concerns about police brutality. When questioned about the police response to the demonstrations, Ruto defended their actions, stating, “If there are any excesses, we have mechanisms to make sure that [they] are dealt with.”
The events of last week have highlighted the delicate balance between fiscal responsibility and social welfare in Kenya. Auba Obama, a Kenyan activist and half-sister of former U.S. President Barack Obama, previously emphasized the plight of Kenya’s youth: “Over 50% of our population who are under 35 have no jobs. We are taxing the jobless and telling them to take a loan. It is not right.”
The path forward for Kenya remains uncertain as they navigate this complex economic and social situation. The government must now balance the urgent need for fiscal stability with the demands of a populace pushed to its limits. The proposed tax measures were part of efforts to reduce the country’s substantial debt burden, but their rejection has forced a reevaluation of economic strategies.
The coming weeks will be crucial in determining whether President Ruto can regain the trust of Kenyans and chart a course that addresses both the country’s financial obligations and the pressing needs of its citizens. The government’s ability to implement effective economic policies while maintaining social stability will be closely watched both domestically and internationally.
