Economic recovery is the main expectation of the Ruto administration
President-elect William Ruto and his deputy Rigathi Gachagua take over the reins of government at a time when the country is struggling with the high cost of living, rising debt and unemployment.
On top of that, the new administration is also inheriting billions of shillings in unpaid bills owed to contractors implementing various projects across the country.
After being sworn in on Tuesday, September 13, 2022, President William Ruto is set to begin implementation of his five-year manifesto titled The Plan: The Bottom-Up Economic Transformation Agenda 2022-2027 with the promise to create jobs, raise incomes especially among poor households and raising enough taxes to reduce Kenya’s appetite for external debt.
The high cost of living
As an immediate measure to address the high cost of food, which saw the inflation rate rise from 8.3% in July to 8.5% in August, Ruto is expected to announce new measures through executive orders that lower unga and fertilizer prices.
During a speech in Meru County, the president-elect promised that starting Tuesday, unga and fertilizer prices would fall upon his swearing in, much to the delight of many struggling consumers and farmers against high commodity prices for the better part of the year.
Kenya’s food production has been affected by the drought that is affecting most parts of the country. The situation was further exacerbated by the Russian-Ukrainian war which disrupted the supply of cereals and fertilizers on the world market.
To ease the pressure, the current administration has released billions in subsidies to stabilize unga and fertilizer prices.
The latest maize flour subsidy worth Ksh 8 billion given to millers has already been exhausted with a 2kg packet of unga now back to Ksh 210 100 weeks ago.
The United Democratic Alliance (UDA) administration is expected to continue the fertilizer subsidy program to all grain and tea farmers across the country, a move that will boost food production from the long rains expected in October. this year and will stabilize prices.
“We have our tea farmers and the price of fertilizer is around Ksh 6,000. I have spoken to officials from the Ministry of Agriculture and will announce new fertilizer prices as we are starting a new journey to change agriculture,” said President-elect Ruto. .
Reducing Kenya’s debt overhang
Ruto also inherits billions of dollars in public debt, which was a major feature during the campaigns. According to the latest data from the Central Bank of Kenya (CBK), total public debt stood at Ksh 8.6 trillion with domestic debt at Ksh 4.27 trillion and external debt at Ksh 4.29 trillion in May 2022.
While admitting that the current state of the economy may not be favourable, the president-elect aims to revamp Kenya’s savings sector to raise enough internal resources to meet government spending.
“I look forward to the day, soon enough, when we can borrow from the Kenyan people’s savings to manage our development instead of borrowing from other countries. Current laws have not allowed us to save money” , did he declare.
The World Bank puts Kenya’s gross savings rate at 15% in 2020, up from a peak of 37% in 1993.
As the Kenya Revenue Authority (KRA) continues to exceed its revenue targets after declines occasioned by the COVID-19 pandemic, the new administration is also expected to draft new tax measures that will support revenue growth.
For the first time in history, KRA’s revenue collection crossed the Ksh 2 trillion mark after collecting Ksh. 2.031 trillion in the 2021/2022 fiscal year of KShs. 1.669 trillion collected in the last financial year 2020/2021.
The president-elect, however, urged the authority to ease its aggressive tax collection measures, even as he urged Kenyans to pay taxes.
The new administration is also expected to tackle the high employment rate by investing in agribusiness and establishing the Ksh 50 billion Hustler Fund for small businesses.
The plan calls for injecting Ksh 250 billion into improving the agricultural sector within five years and another Ksh 250 billion for micro, small and medium enterprises as a means of job creation.