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Kenya’s Court of Appeal on July 31, 2024, struck down the Public Finance Bill 2023, a major setback for President William Ruto. The law, enacted in June 2023, is crucial for financing the national budget but has already sparked protests and legal challenges due to its numerous controversial taxes.
Appeal Court judges found irregularities in parliamentary procedure and ruled the law was “fundamentally flawed and therefore unconstitutional”. The decision calls into question the legal basis for the new taxes introduced by the 2023 Finance Act.
The cancellation comes after President Ruto was forced to withdraw his 2024-2025 budget proposal at the end of June in the face of strong protests. The 2023 Finance Law, passed to reduce the weight of the public debt estimated at 71 billion euros (about 70% of GDP), introduced additional fuel taxes and a maximum wage tax aimed at increasing state revenue.
With the repeal of the law, planned tax measures will no longer apply, posing a major challenge to financing government spending. William Ruto, who has already announced budget cuts, will have to consider other austerity measures. Economist Michael Chege expressed concern about the impact of the decision on support from the International Monetary Fund, which must verify a new round of aid to Kenya at the end of this month.
The removal of the law is a fresh blow to President Ruto and his government, which must now find alternatives to plug a budget deficit. The government can still appeal to the Supreme Court, but the country’s financial future remains uncertain.
International observers are closely watching the situation because of the impact it could have on Kenya’s economy and political stability. IMF support is vital to the country and any disruption to this relationship could exacerbate current economic challenges.
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