Africa (Commonwealth Union) _ Kenya’s President, William Ruto, declared on Tuesday that the country is “out of the danger of over-indebtedness,” commending his economic policy despite public discontent over tax hikes and subsidy cuts. Ruto, speaking at a ceremony marking 60 years of independence, stated that Kenya had made challenging decisions to navigate away from the threat of over-indebtedness, setting the nation on a new course. It seems Ruto chose to emphasize Kenya’s economic growth, perhaps as a counterpoint to the concerns raised about the country’s rising debt. By focusing on positive economic indicators, he aims to present a more optimistic perspective on Kenya’s financial situation.
The Kenyan economy faced significant challenges due to COVID-19, the repercussions of the war in Ukraine, and a severe drought in the Horn of Africa. These factors led to depleted reserves, soaring inflation, and a depreciating currency. As of the end of June, the country’s public debt exceeded 10,100 billion shillings (approximately 64.4 billion euros), accounting for around two-thirds of the GDP.
The cost of servicing public debt has surged alongside the depreciation of the Kenyan currency. President Ruto, elected in August 2022, faced challenges as he implemented new taxes, despite campaign promises to the contrary. This decision led to opposition protests and a period of unrest, resulting in several deaths between March and July. The upcoming repayment of $2 billion in Eurobonds poses a significant financial challenge for Kenya. This obligation requires careful financial management to ensure the country meets its debt obligations while addressing other economic priorities. It highlights the importance of a comprehensive strategy for debt management and economic sustainability.
Ruto implemented a reduction in subsidies, particularly on petrol, which had been introduced by his predecessor, Uhuru Kenyatta. His rationale emphasized prioritizing subsidies on production rather than consumption.
