President William Ruto has revealed that increasing taxes is one of the strategies the Kenya Kwanza government adopted to rebuild the economy.
Speaking on Wednesday, February 21, Ruto said the successful buy-back of a substantial part of the $2 billion 2014 Eurobonds is a milestone for Kenya.
He stated that the government paid $1.5 billion as part of the Eurobonds which was scheduled to mature on June 24, 2024.
“The successful execution of both the buy-back and the new bond issue demonstrate strong investor confidence in Kenya through the international capital markets, and a vote of confidence in the government’s overall economic management, particularly our public debt management strategy,” he said.
Ruto said the money was raised on February 12 because of the government’s efforts to revive the economy since taking over office.
“It is also a most welcome culmination of a determined turnaround policy, from an initial state, in September 2022, characterized by simultaneous reduction of revenues as a percentage of GDP and the increase of debt as a percentage of GDP resulting in fiscal deficit, which led to unsustainable expansion of Kenya’s debt stock,” he stated.
Ruto Strategies to Rebuild the Economy
The President explained that he pursued a turnaround strategy focused on increasing tax revenues and reducing both spending and the rate of debt accumulation.
“Upon assuming office, we committed to bringing our economy back on track by taking necessary measures, making necessary choices and outright sacrifices to raise revenues, reduce expenditure, and basically make sure that as a nation, we live within our means,” he said.
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However, he pointed out that the government has never sacrificed social and development and has been guided by the principles and values of equity, fairness, and prudence in public spending.
Further, Ruto said the government has implemented a combination of strategies to manage Kenya’s debts.
This includes the diversification of financing sources, smoothening the maturity profiles and proactively managing the debt liabilities in general to maintain a low cost of debt and ensuring that debt is always sustainable.
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Shilling Gaining US Dollar Saved Kenya
He also explained how the Kenyan shilling gaining against the dollar helped the country save Ksh.722 billion in debt payment.
Ruto emphasized that the government’s plan on sound debt management strategy, fiscal and general economic management and the tightening the monetary policy by the Central Bank of Kenya have boosted investor confidence.
This he said resulted in the appreciation of the shilling against the US dollar, from Ksh.162 to Ksh.142.
“In turn, this has reduced our overall debt by Ksh.722 billion, and also reduced our debt service costs by Ksh.195 billion over the next 6 years, saving the country a total of Ksh.917 billion,” he revealed.
The President also said the performance of the recent issue of the Eurobond, the Infrastructure Bond and increased liquidity in the market are additional indicators of rising investor confidence.
