Kenya finance bill reflects fiscal consolidation drive

Significance

President William Ruto wants to use this bill to increase government revenue to help manage the difficult fiscal situation. However, the bill’s critics warn it may aggravate an already painful cost-of-living crisis and constrain growth.

Impacts

• International financial institutions’ commitment to Kenya will remain firm, with current programmes extended and new support expected.
• Moody’s latest rating downgrade will have limited short-term impact, as Nairobi is unlikely to tap international capital markets this year.
• Parliament will likely introduce a medium-term debt anchor set at 55% of GDP, which will replace the existing nominal debt limit.