Kenya to borrow Shs28tn to cover abandoned Finance Bill
President William Ruto yesterday disclosed that the Kenya Kwanza government will continue borrowing to finance government operations following the decision to drop the Finance Bill 2024.
Speaking during a roundtable interview with journalists at State House, Nairobi, Ruto highlighted the severe ramifications this decision has on the budget, necessitating the government to resort to borrowing.
"We have dropped the Finance Bill. What does that mean? It means we have gone back almost 2 years," President Ruto stated.
"It means that this year we are going to borrow KShs1 trillion (about Shs28 trillion) to be able to run our government. Dropping the finance bill means we will not confirm the JSS teachers, it means we cannot support our farmers, it means we will continue to import potatoes from Europe," Added Ruto
The Finance Bill, 2024, which was expected to generate Ksh 346 billion in additional revenue, faced growing unrest and protests, particularly from the Gen-Z population, leading to its rejection by the President.
Ruto explained that without the funds from the proposed bill, it would be impossible to assist local farmers and ensure they receive a fair return for their produce.
"It means we cannot help our farmers get a return of KShs50 per litre of milk, we cannot pay coffee farmers' debts, we cannot support the cherry fund, and we cannot help Mumias farmers with their debts," he said.
In response to the rejection of the Finance Bill, President Ruto has directed the National Treasury to prepare a mini-budget starting in July.
President Ruto emphasized the need for expenditure cuts across all government sectors to manage the expected shortfalls in revenue, including allocations to the Executive.
Kenya, which agreed to a four-year loan with the IMF in 2021 and secured additional lending in May 2023 to support climate change measures, now faces increased borrowing to meet its budgetary requirements.
The total IMF loan access stands at $3.6 billion.
