Kenya Budget Rejected, IMF Meeting Looms
Published: August 8, 2024, 10:54 PM
Kenya has been forced to withdraw its 2024-2025 budget following widespread protests in the country. Additionally, an appeals court declared the 2023 public finance bill “illegal,” citing irregularities in the parliamentary procedures.
The nation, already burdened by debt, is facing severe financial constraints and is rapidly running out of money.
The court ruling highlighted inconsistencies in the budget process, expressing concern over the government’s handling of the situation. “This is a real shame for the president,” stated Judge XN Iraq, an economist and professor at the University of Nairobi.
In response to the budget setbacks, the government announced cuts to various ministries, including executive, judicial, medical, and transportation. These measures are aimed at reducing borrowing and balancing the books.
“Executives must bring all creditors to the table and have an honest conversation with them about the importance of the situation,” advised Jason Braganza, executive director of AFRODAD, an organization specializing in debt issues in Africa. “We must negotiate rescheduling deadlines and find solutions to protect government income.”
The country’s financial woes have cast a shadow over business confidence, with uncertainty looming over access to financing and operational costs. The International Monetary Fund (IMF) is scheduled to visit Kenya at the end of the month to assess the situation and potentially approve further aid.
One small relief for borrowers came this week as the Central Bank of Kenya reduced its key interest rate from 13 to 12.75%, citing a decrease in inflation and a strengthening Kenyan shilling.