KEY POINTS
- Kenya seeks public input on new economic legislation after scrapping tax hikes.
- Finance Minister John Mbadi rules out debt restructuring despite high repayment pressures.
- The public can submit legislative proposals until September 20.
Kenya’s finance ministry is turning to the public for suggestions on new laws to boost revenue and address ongoing economic challenges.
This follows President William Ruto’s withdrawal of tax hikes after widespread protests, according to a report by Reuters.
Public participation in economic reforms
Finance Minister John Mbadi announced the plan during a budget meeting, highlighting the need for public involvement to find solutions. The government had scrapped tax increases worth over 346 billion shillings ($2.7 billion) following protests that resulted in over 50 deaths.
The decision left Kenya’s heavily indebted government with a larger budget deficit, compounding issues with delayed funding from the International Monetary Fund (IMF).
“We are barely managing. This is not where we wanted to be, but we are here,” Mbadi stated. The minister, appointed from the opposition last month to help stabilize the government, initially proposed reviving the tax hikes but backed down after public backlash.
Mbadi said the public would be invited to submit legislative proposals until September 20, to address the economic situation and improve government revenues.
Debt repayment and tax relief
Mbadi ruled out debt restructuring despite mounting repayment pressures. He acknowledged that Kenya’s debt levels exceed the optimal thresholds set by the World Bank and IMF but stressed the country’s commitment to continue servicing its obligations.
“We have no two ways about it. There is no debt restructuring in this country. We will not accept it. We will manage our debts and pay and remain afloat,” he insisted.
While the government focuses on managing its debt, Mbadi indicated that tax cuts could be considered in the medium term once the economic situation improves. Plans include reducing the value-added tax (VAT) on goods and services from 16 percent to 14 percent and lowering the corporate income tax from 30 percent to 25 percent.
Economic struggles and the road ahead
Kenya has faced economic challenges, worsened by years of borrowing for infrastructure projects. The country is now grappling with a budget shortfall and rising debt payments, further straining government finances.
Public unrest has mounted over the tax burden, pushing the administration to explore new solutions with greater public input.
The role of the citizens in the formulation of these reforms will be pivotal in attempts aimed at the establishment of a balanced budget and mitigating escalating frustration.
