KENYA NEWS
10-07-2024 by Freddie del Curatolo
Kenya is calmer after the youth protests and the government's running corrections. Social proclamations about new demonstrations yesterday were ignored by the citizens, who now need jobs and confidence more than ever.
But it will not be easy, because Kenya faces obstacles that the international economy has put in the way of its growth, since it has helped it to get into debt up to its neck, without placing too many stakes on rampant corruption and the judicious use of funds and resources.
Earlier this week, the international rating agency Moody's downgraded the country's long-term local and foreign currency issuer and senior unsecured foreign currency debt rating to 'Caa1' from 'B3', the lowest level of so-called 'junk territory', defined as 'very high credit risk'.
Simply put, like most Kenyans, the outlook for the country is now negative, according to Moody's, after the government chose to withdraw the Finance Bill that 'contained measures aimed at supporting the government's goal of raising USD 2.7 billion in additional taxes to reduce the budget deficit and state debt'.
To compensate for the withdrawal of the finance bill, the Ruto administration has proposed spending cuts that, according to experts, are expected to reduce the fiscal deficit, but at a more gradual pace than previously assumed and, as a result, Kenya's debt accessibility is expected to remain weaker for a longer period.
'In the context of heightened social tensions, we do not expect the government to be able to introduce significant revenue-raising measures in the near future,' the rating agency said.
That Kenya is now between the anvil of public debt and the hammer of its population's discontent is well established. According to Moody's, borrowing costs for the financially struggling government are likely to rise further.
'Against the backdrop of rising social tensions, we do not expect the government to be able to introduce significant revenue-raising measures in the near future,' say Moody's.
President Ruto announced last week that he will have to cope with the lack of funds for state spending by borrowing again, but at this point it will have to be understood to whom and with what formula and interest, given the downgrading of confidence. Public spending cuts are also a sword of Damocles over the government's head, as the main ones concern employees and officials, as well as offices and contributions to counties. Lastly, we need a strong and unprecedented response to corruption, which means not just the 'bribe', but enrichment or wealth in all its forms, which for too many years has been continuously cultivated and become a habit. Which now Generation Z not only does not tolerate, but eviscerates every day on social networks, calling for investigations, prosecutions and dismissals.
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