Kenya: Moody’s negatively sanctions William Ruto’s retreat

Posted on July 9, 2024

Lecture: 2 minutes.

After deletion by President William Ruto one of The controversial budget bill, which includes new taxes, Financial ratings agency Moody’s downgraded Kenya’s long-term debt rating with a negative outlook.

the next day one of The symbol of the day of violence is Protesters attacked parliament. Kenyan head of state The text was deleted on June 26. To compensate for this divestment, William Ruto announced on July 5 that he would increase borrowing by about 169 billion euros. of shillings (€1.2 billion) and spending cuts of around 177 billion shillings (€1.3 billion).

“The additional borrowing will increase our budget deficit from 3.3% to 4.6%,” Kenya’s president declared at the time.

‘Important policy change’

For Agencies symbol, “The government’s decision not to implement planned tax increases and instead rely on spending cuts to reduce the budget deficit is a major policy shift with significant implications for the fiscal trajectory and this Kenya’s Financing Needs”.

read: Five questions to understand anti-Ruto discontent in Kenya

As a result, Moody’s downgraded the East African country’s long-term debt rating from B3 to Caa1, continuing that the “outlook remains negative.” “Against the backdrop of rising social tensions, we This is “We do not anticipate that the government will be able to take significant steps to raise revenue in the near future,” the agency continued in a statement released on Monday.

Record spending

The budget draft stirs up latent discontent be opposed to Dear President Ruto, Elected in August 2022, promising to defend the most moderate, but then increasing tax pressure on the population.

For the government, these tax measures are necessary to restore the country’s room for maneuver. Heavy debt (public debt is around 70% of GDP), and is relying on a record spending of Sh4 trillion (€29 billion) to finance its ambitious 2024-25 budget.

But he was surprised by the scale of the protests, known as Occupy parliament” (“Occupy Parliament”), which was born on social networks after the budget was presented to Parliament on June 13 Arousing strong response among “Generation Z” (young people born after 1997). According to official protection agencies of Human Rights (KNHCR), Thirty-nine people have died since the first demonstrations on June 18.

The government has already increased income tax and health contributions and doubled VAT last year. exist Nature.

(AFP report)

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