Kenya’s President William Ruto has withdrawn the proposed Finance Bill that would have increased taxes after it sparked riots and protests in the centre of Kenya’s capital, Nairobi.
Kenya, which is one of the fastest growing economies in Africa, has subsidised its economic growth with an ever growing and massive public bill. It owes at least up to $10.6 billion alone to its biggest national-creditor, China, and risks losing public assets if it defaults on its Chinese loans. Kenya’s debt to GDP ratio is at 73% with up to $82.1 billion in debt.
On the other hand, the IMF’s loans to Kenya which are around $2.5 billion are uncollateralised, but come with a list of economic and social demands. The IMF has proposed Kenya to increase taxes to pay its mounting interest bill, which is now eating up 37% of its annual revenues, before protests and riots in the capital forced the President to withdraw the Finance Bill.
Kenya is now left with no other options than to sit down with its lenders and restructure its debt or begin defaulting on some of its loans.
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