President William Ruto spoke by phone with International Monetary Fund chief Kristalina Georgieva days after he withdrew Finance Bill, 2024 in response to deadly nationwide protests against tax hikes.
Two diplomatic sources, who sought anonymity, confirmed the phone conversation on a day the President chaired a crisis Cabinet meeting where he instructed the National Treasury to reorganise the budget to accommodate the Sh300 billion budget gap.
According to the sources, there was agreement among major donors that the IMF needed to show flexibility on programme targets as Kenya looked to fill the gap caused by the bill's withdrawal.
Further, one of the sources added that the government should show a commitment to reducing wasteful spending, cracking down on corruption and increasing accountability in exchange for that flexibility.
The Cabinet meeting Thursday is said to have discussed major austerity measures, according to a Cabinet Secretary who spoke with Nation in confidence.
“We have agreed that we are going to implement austerity measures and budget cuts to balance the shortfall occasioned by the withdrawal of Finance Bill,” said the CS.
General feeling
A Cabinet dispatch indicated that there will be substantial cutting down of budgets to “balance between what to be implemented and what can wait” and ensuring that key national programmes are not affected.
“Our plan is good and solid and, in the fullness of time, we shall be vindicated,” President Ruto said at the Cabinet meeting.
There has been a general feeling that the country has an expenditure problem. Some of the revenue raised goes into wastage through corruption and to finance luxury and extravagance among top government officials.
On the day Dr Ruto climbed down by dropping the Finance Bill, he proposed budget cuts in the three arms of government as well as county governments.
