Kenya president withdraws controversial finance bill after protests
TLDR
- Kenyan President Ruto withdraws proposed tax increases from Finance Bill 2024 in response to protests
- Legislators remove contentious taxes, including a 16% levy on bread, sparking protests over rising food prices
- Fiscal reforms positively received by markets, but citizens protest due to high youth unemployment and inflation
On Wednesday, Kenyan President William Ruto withdrew proposed tax increases from the controversial Finance Bill 2024 in response to widespread protests.
President Ruto had introduced the new taxes to strengthen state finances and secure additional funding from the International Monetary Fund (IMF). On Tuesday, legislators from his ruling coalition managed to pass the bill after removing some of the more contentious taxes, including a 16% levy on bread.
While these fiscal reforms have been positively received by the markets, they have sparked protests among citizens facing rising food prices and a youth unemployment rate estimated to be as high as 67% by the Federation of Kenya Employers.
Key Takeaways
The Ruto administration has raised tax rates and implemented strategies to reduce Kenya’s dependency on borrowing, aligning with fiscal reforms agreed upon with the IMF in 2021. The Finance Bill aimed to generate an additional 302 billion shillings ($2.3 billion) to help cover a budget deficit of 3.3% of GDP. On Tuesday, after lawmakers approved the new tax measures, police fired on crowds around the parliament, and protesters entered the senate chamber and national assembly. The Kenya Medical Association reported at least 23 deaths and 30 people treated for bullet wounds. Most demonstrators, young Kenyans in their 20s and 30s, coordinated through social media. Following President Ruto’s statement, Kenya’s 2031-dollar bonds recovered from earlier losses, trading slightly stronger with a yield of 10.67%, according to Bloomberg data.
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