President Ruto painted a bleak picture of the country’s future on Sunday, following the rejection of the proposed Finance Bill, 2024.
Ruto declined to sign the bill following pressure from Kenyans. It was meant to raise about Sh346 billion to bridge a budgetary gap.
The announcement sparked a debate online why the figure had increased.
But according to Ruto, Kenya has gone back two years and will need to borrow at least Sh1.2 trillion this year to keep the government operational.
“We have dropped the Finance Bill. What does that mean? It means we have gone back almost two years,” Ruto told journalists at State House on Sunday.
“It means that this year we are going to borrow 1 trillion shillings to be able to run our government.”
Ruto said dropping the Finance Bill means the government will be unable to confirm 46,000 Junior Secondary School teachers on permanent and pensionable contracts.
He stated that without the funds that his administration hoped to raise, it will be impossible to assist Kenyan farmers in ensuring they receive at least Ksh.50 per litre of milk.
“It means we can not help our farmers get a return of Sh50 per lire of milk, we can not pay coffee farmers’ debs, we can not support the cherry fund, and we can not help Mumias farmers with their debts,” he said.
Ruto announced last Wednesday that he would not sign the contentious Finance Bill into law, following days of growing unrest and protests in more than 15 counties.
The bill was intended to generate Sh346 billion ($2.68 billion), or 3% of GDP, in additional revenue.
Kenya agreed a four-year loan with the IMF in 2021, and signed on for additional lending to support climate change measures in May 2023, taking its total IMF loan access to $3.6 billion.
The IMF requires regular reviews of reforms – in Kenya’s case every six months – before it releases tranches of funding.
Kenya reached a staff level agreement with the IMF earlier this month on a seventh review – before m Ruto abandoned the tax bill on Wednesday – even then warning of revenue shortfalls.
The review in theory paves the way for $976 million, but it had not secured crucial IMF board sign-off.