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Kenya’s President Warns of Borrowing Surge After Rejected Finance Bill

NAIROBI — President William Ruto announced on Sunday that Kenya will need to borrow significantly more to keep the government operational following the rejection of a highly controversial finance bill aimed at increasing tax revenues.

President Ruto withdrew the bill last Wednesday after violent protests erupted, resulting in the arson of the parliament building. Despite the decision to abandon the bill, Ruto expressed concern about the long-term fiscal impacts, stating the setback would cost the country two years in potential revenue.

“The rejection of the finance bill means Kenya will have to borrow an additional one trillion shillings ($7.6 billion) to sustain government operations,” Ruto declared. This represents a 67% increase from the previously planned borrowing.

In his address, the president indicated that measures to reduce government spending were being considered. Potential cuts include reductions in allocations to the judiciary and county governments, as well as trimming expenses within his own office.

The proposed tax hikes, which had sparked the protests, were expected to generate approximately 350 billion Kenyan shillings.

The plan also included borrowing an additional 600 billion shillings to help manage the country’s substantial debt load. Currently, about 60% of Kenya’s revenue is directed towards servicing an $80 billion debt burden.

“I have been working tirelessly to extricate Kenya from this debt trap,” Ruto stated during a press conference. “It is easy to reject the finance bill, but this decision carries significant consequences.”

One immediate impact of the bill’s rejection, according to Ruto, will be on the employment of 46,000 junior secondary school teachers who are currently on temporary contracts. Additionally, healthcare services across the nation may suffer.

The president’s comments come in the wake of nationwide protests, where demonstrators argued that the proposed tax increases would lead to government waste and mismanagement of funds.

Despite the violent clashes and the burning of the parliament building, protesters managed to rescue two members of parliament trapped inside.

As Kenya navigates these turbulent financial waters, the decision to drop the finance bill leaves the nation grappling with the dual challenges of increasing debt and the necessity for fiscal prudence.

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