Ruto Reveals His Biggest Headache Since Assuming Office

President William Ruto has acknowledged Kenya’s escalating debt as one of the most significant challenges during his tenure, revealing the country’s debt-to-development ratio, where Ksh7 out of every Ksh10 collected goes toward repaying debts.

Despite the tough consequences, Ruto aims to flip this ratio, emphasizing tax collection as the primary solution. He cited former President Mwai Kibaki’s success in adopting VAT to increase revenue during his term.

Kenya’s current debt exceeds Ksh10 trillion, with looming repayments, such as the Eurobond, prompting the government to re-strategize fiscal policies, including new tax measures like the 1.5% Housing Levy and 2.75% health insurance deductions.

Ruto’s candid admission of the debt challenge came during a meeting with Jubilee leaders at State House Nakuru, underscoring the urgency to address the fiscal imbalance.

The pressure from creditors has forced the government to seek alternative revenue streams, leading to the introduction of measures like the 1.5% Housing Levy and health insurance deductions. Ruto emphasized the need for transformative policies to alleviate the debt burden, drawing parallels with former President Kibaki’s successful economic strategies.

The impending maturity of the Eurobond in the coming months adds a sense of urgency to the government’s fiscal planning.

Ruto revealed that Kenya would pay Ksh500 billion towards the Eurobond between December 2023 and January, highlighting the financial strain the country faces. The diverse sources of Kenya’s debt, including loans from multinational institutions like the World Bank, IMF, and countries like China, present a complex challenge that requires strategic solutions.

Ruto’s commitment to changing the debt-to-development ratio signals a proactive stance on fiscal responsibility, acknowledging the necessity of navigating these challenges for sustainable development.

The government’s focus on increasing revenue through taxes reflects a pragmatic approach, although it raises concerns about potential impacts on citizens. As discussions on fiscal policies unfold, the delicate balance between economic stability and public welfare remains a critical consideration.

In a broader context, Ruto’s disclosure sheds light on the intricate dynamics of managing a country’s finances, especially when grappling with substantial debt obligations. The president’s recognition of the need for transformative measures aligns with ongoing efforts to secure Kenya’s economic stability, emphasizing the importance of strategic decision-making in addressing pressing challenges.