Despite the valid rejection of some aspects of the finance bill and the public outcry, I feel sympathy for President William Ruto, who is facing a difficult situation. If he borrows money, he faces public outrage; if he raises taxes, he encounters backlash. How can Ruto fulfill his promises without borrowing or increasing taxes?
President Ruto has done remarkably well under these circumstances. He inherited a harsh reality with many debts from Uhuru Kenyatta’s tenure maturing in 2023 and beyond. He must balance executing visible projects with maintaining the country’s creditworthiness by paying off interest liabilities that are falling due.
Last financial year, Kenya repaid part of the $2 billion Eurobond. Many don’t realize that Ruto is borrowing to pay off interest on these loans. Additionally, he faced the challenges of a rapidly devaluing currency, fast-maturing public debt, sharply rising fuel prices and higher food prices. Despite these challenges, he has performed splendidly well on all four fronts: food prices have come down, our currency is performing well against others, and he preserved our global creditworthiness by repaying public debt that fell due in the 2023/2024 financial year.
Despite the finance bill crisis, I have strong faith that he will ultimately succeed because he is well-suited for the job. I believe that soon, the positive outcomes of his administration will become evident to everyone—it’s just a matter of time.
While it is not easy to manage these realities without borrowing or expanding our tax base, the current suggested increases in taxes have come too soon. After critical tax bills in the 2023/2024 financial year, a bit of a breathing window was necessary instead of back-to-back tax increases in two consecutive financial years.
