In summary
- Kenya to borrow 1 trillion shillings to fund budget deficit.
- Government back on austerity measures to address economic crisis.
- Kenya reached a staff level agreement with the IMF earlier this month
Kenya Kwanza Government will borrow a whooping 1 trillion shillings to run the government in the next one year.
According to President William Ruto the rejection of Finance Bill 2024 is a big blow to the country’s economic agenda and that the country is in financial crisis.
Ruto says they will have to turn to lenders and also to take serious austerity measures to ensure government runs.
‘‘We are going to borrow 600 billion shillings and another additional 300 billion shillings to address the deficit..We have dropped the Finance Bill. What does that mean? It means we have gone back almost 2 years.” Ruto told journalist at state House Briefing session.
“It means we can not help our farmers get a return of Ksh.50 per lire of milk, we can not pay coffee farmers’ debs, we can not support the cherry fund, and we can not help Mumias farmers with their debts,” he added.
IMF Loan Trend
Kenya reached a staff level agreement with the IMF earlier this month. The review in theory paves the way for $976 million, but it had not secured crucial IMF board sign-off.
“There isn’t a great deal of room to manoeuvre unless you really start doing much more thorough reviews” of spending, said Giulia Pelligrini, senior portfolio manager with Allianz Global Investors, of what Kenya can do to meet targets. “So it’s going to be difficult.”
