IMF Pity Kenyans For Ruto’s Hiked Taxes

IMF Pity Kenyans For Ruto’s Hiked Taxes

IMF Pity Kenyans For Ruto’s Hiked Taxes

Regarding the effects of President William Ruto’s increased taxes as outlined in the Finance Act 2023, the International Monetary Fund (IMF) has made its position known. In a January document, the International Monetary Fund expressed sympathy for Kenyans who have been negatively impacted financially by the increased tariffs.

It also admitted that most local residents are unhappy with the tax policies that have increased living expenses in the face of a declining shilling. “We were deeply saddened that some protests became violent,” the IMF said, referencing the opposition leader Raila Odinga’s demonstrations and the cascading effect of Ruto’s fiscal policies. “We empathise with the very difficult economic conditions facing the people of Kenya,” the statement read.

“The discontent reflected existing concerns about the rising cost of living, alongside efforts to remove fuel subsidies and increase in the electricity tariff,” added the report in part. However, the IMF backed Ruto, insisting that the tax revenue measures were necessary to address some of the fiscal challenges facing the country.

The IMF specifically noted that the measures were intended to address debt vulnerabilities, given that Kenya’s domestic loan reached Ksh5 trillion for the first time ever. In December of previous year, there was Ksh11 trillion in total debt. Kenya is struggling to pay back the Ksh312.1 billion Eurobond that is due to maturity in June of this year after recently repaying China’s Ksh72 billion loan for the Standard Gauge Railway (SGR).

However, it was mentioned that the government had taken some steps to assist Kenyans.There are compromises in the FY2023/24 Budget and 2023 Finance Act, but they significantly lessen Kenya’s debt concerns. The difficult external environment, which includes more stringent financial requirements and unstable global commodity prices, exacerbates these.

“These tradeoffs can be mitigated by protecting and enhancing social and development expenditures. In this regard, the authorities’ social initiatives, including the Financial Inclusion Fund (Hustler Fund), affordable housing, and the expansion of water infrastructure respond to these social needs,” read the statement in part.

The Ruto administration included new tax measures in the Finance Act 2023 in an effort to raise money for government initiatives.Among the new policies that were implemented were the 1.5% housing levy and the 16% VAT on fuel items.

For Kenyans with salaries, rates for health insurance and pensions have also increased. Over the past year, there has also been an increase in the cost of government services.In spite of rising living expenses, Kenyans now make less money as a result of all these developments. Notably, a study conducted by the research firm Infortrak found that more than 70% of Kenyans were having financial difficulties.