Kenya plans to reduce its 2024-25 spending by 1.9% and widen the fiscal deficit to 3.6% of GDP, following the rollback of tax hikes due to protests.
In response to protests demanding his resignation and reforms, President William Ruto dismissed nearly his entire cabinet and promised a more inclusive government.
To address a $2.7 billion budget gap caused by the withdrawn tax hikes, Ruto proposed spending cuts and additional borrowing.
Next week, lawmakers will debate the supplementary budget, which outlines a total spending of 3.87 trillion Kenyan shillings ($30 billion), down from 3.99 trillion. Recurrent expenditure is set to drop by 2.1% and development expenditure by 16.4%.
Despite retracting the tax hikes, the road maintenance levy was increased to 25 per litre of fuel from 18 shillings.
Ruto faces pressure from international lenders like the IMF to cut deficits while managing a population struggling with high living costs. The IMF is assessing Kenya’s recent developments and will adjust its approach accordingly.
