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Kenya’s Ruto vows to cut spending and borrowing, in a move back to sanity

Kenya's Ruto vows to cut spending and borrowing, in a move back to sanity

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By George Obulutsa and Duncan Miriri

Nairobi: Kenya's new president, William Ruto, instructed the finance ministry on Thursday to cut 300 billion shillings (about R45bn) from annual government spending this year, to bring the country back to sanity.

Ruto, who was sworn in on September 13, appointed his cabinet on Tuesday, naming former central bank governor Njuguna Ndung'u as finance minister to navigate the economy through rising inflation, a heavy debt burden and drought.

Ruto said he aimed to bring the recurrent expenditure down further next year, by an undisclosed amount, in a bid to achieve a recurrent budget surplus by the third year.

The president did not give details on the expenditure to be cut. Recurrent expenditure usually includes civil servant salaries, domestic and foreign interest payments, pensions and fuel costs for the government fleet of vehicles.

“I have instructed Treasury to work with ministries to find savings of 300 billion shillings in this year's budget,” Ruto said in his first speech as president to parliament.

“Next year, we will bring it further down so that, by the third year, we have a recurrent budget surplus.”

The 2022-2023 budget was presented in April.

The president said the government should never borrow to finance recurrent expenditure, adding, the market could not sustain the kind of borrowing the government was doing.

“We must bring ourselves back to sanity,” he said.

A finance ministry document, issued earlier this month, showed recurrent expenditures were projected at 2.27 trillion shillings or 16.2% of gross domestic product in the 2022/23 July-June fiscal year.

Ruto became president after winning a closely contested election last month, with campaign pledges to create economic opportunities for the poor.

He faces a narrow fiscal space to roll out his policies after his predecessor, Uhuru Kenyatta,increased public borrowing to fund infrastructure projects.

The finance ministry has forecast economic growth of 5.5% this year, compared with 7.5% in 2021, a continuation of recovery from the Covid-19 pandemic, which led to a contraction of 0.3% in 2020.

Original Article

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