Kenya’s Economic Challenges: Ruto’s Response

President Ruto Announces Sweeping Austerity Measures to Address Public Debt and Economic Challenges

Nairobi, July 5, 2024 – In a decisive move aimed at addressing Kenya’s mounting economic challenges, President William Ruto has announced a series of stringent austerity measures. Speaking from State House, Nairobi, the President outlined the government’s strategy to manage public debt and ensure the efficient allocation of resources, following the withdrawal of the Finance Bill 2024.

Acknowledging Recent Turmoil

President Ruto began his address by acknowledging the difficult period the country has faced in recent weeks. He expressed his deepest condolences to the families of those who lost their lives and extended sympathies to those injured and affected by the recent unrest. “One life lost is a life too many,” he said, emphasizing the government’s commitment to supporting all affected individuals.

Focus on National Issues

Shifting the focus to the nation’s pressing issues, President Ruto highlighted the importance of addressing key concerns such as taxation, public debt, budget allocation, corruption, the cost of living, unemployment, and opportunities for young people. He praised the shift in public discourse towards these substantive issues, moving away from divisive tribal and political rhetoric.

Public Debt Audit

To tackle the growing concern over public debt, President Ruto announced the formation of an independent task force to conduct a comprehensive forensic audit of Kenya’s public debt. The task force has been given a three-month mandate to provide clarity on the debt’s extent and nature, assess the expenditure of public resources, and recommend sustainable management strategies.

Budget Adjustments and Fiscal Measures

Gen-Z protestors marched through the streets of Kisii town During the recent anti-tax demonstrations across the country. Photo| Orange Wycliff

With the withdrawal of the Finance Bill reducing revenue targets by Ksh 346 billion, the government has opted for a balanced approach to mitigate the impact. President Ruto outlined a plan to propose a budget cut of Ksh 177 billion while borrowing the remaining amount. This strategy aims to protect critical government services and manage the fiscal deficit, which will increase from 3.3% to 4.6%.

The additional borrowing will fund essential services including:

• The hiring of Junior Secondary School teachers and medical interns
• Funding the milk stabilization program for dairy farmers
• Reviving stalled road projects
• Retaining the fertilizer subsidy program
• Settling debts owed to farmers in the coffee subsector
• Capitalizing the Coffee Cherry Fund
• Enabling public sector-owned sugar mills to pay sugarcane farmers
• Additional funding for the new higher education funding model
• Settling arrears owed to counties, NG-CDF, and pensions

Immediate Austerity Actions

To align government expenditures with the new budgetary constraints, several immediate actions will be implemented:

• Dissolution of 47 State Corporations with overlapping functions, integrating them into line ministries and transferring affected staff.
• Suspension of filling Chief Administrative Secretaries positions.
• Reduction of government advisors by 50%.
• Removal of budget lines for the offices of the First Lady, the spouses of the Deputy President, and the Prime Cabinet Secretary.
• Elimination of confidential budgets in various Executive offices, and a 50% reduction in renovation budgets.
• Mandatory retirement for public servants at age 60, with no extensions.
• Suspension of new motor vehicle purchases by the government for 12 months, except for security agencies, with a new transport policy to be developed.
• Suspension of non-essential travel by state and public officers.
• Prohibition of state officers and public servants from participating in public contributions/Harambees, with legislation to be developed for structured contributions.

Future Government Changes

President Ruto also indicated that further changes in government would be announced to enhance efficiency, transparency, and service delivery. He reaffirmed the government’s commitment to ensuring that citizens receive maximum value for their resources and that the public sector prioritizes their welfare.

Commitment to Economic Transformation

In conclusion, President Ruto expressed his belief that these measures would set Kenya on a path to economic growth and enable the achievement of the strategic objectives of the bottom-up economic transformation agenda. He reiterated his commitment to radically enhancing opportunities for Kenyans and transforming the country.

“We are determined to carry out these and other changes to improve the quality, efficiency, and transparency in serving the people of Kenya,” President Ruto stated, setting a hopeful tone for the nation’s economic future.

Stay tuned for more updates on these developments as we continue to follow this story closely.

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