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Kenya: President Ruto enacts new finance bill

People walk past the parliament buildings during a protest over tax hike plans in Nairobi on June 6, 2023.   -  
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SIMON MAINA/AFP or licensors


Kenyan President William Ruto has enacted a contentious new finance bill which will see the introduction of new taxes, amidst fierce criticism from the opposition and public.

Announced by the presidency on Monday, the bill will see an increase in VAT on fuel from 8% to 16%, as well as an unpopular payroll levy to finance a low-cost housing program. Initially set at 3%, the levy has been reduced to 1.5%.

Faced with the discontent caused by the law, the government withdrew some of the budget's initial provisions, including a tax on beauty products.

Ruto's government, which was elected in August 2022, hopes that the finance project will help to refill Kenya's heavily depleted coffers. 

Fierce opposition

The country's public debt has reached a high of 65 billion dollars, or 67% of gross domestic product. As the Kenyan shilling continues to depreciate, repayment is becoming increasingly costly.

However, the opposition coalition Azimio, led by Raila Odinga, accuses Ruto of reneging on his election promises to improve living conditions for Kenyans. 

"Our position remains that the Bill is a mistake and an experiment Kenyans can ill afford," Odinga's spokesman Dennis Onyango told AFP on Monday. 

Azimio is due to decide on Tuesday whether to take action against the law. 

Between March and May, the coalition organised antigovernmental marches which killed three, according to authorities. 

"Significant challenges"

The International Monetary Fund praised Ruto's government at the end of May for responding "promptly" to the economic challenges, in a press release announcing a $1 billion loan to Kenya. 

Yet, while the medium-term outlook is "favourable" for the Kenyan economy, "significant challenges remain against the backdrop of slow global economic growth and tight financial conditions", the IMF warned.

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