Kenyan President Deploys Military Amid Protests Over New Tax Plan

Kenyan President William Ruto has deployed military forces to quell nationwide anti-government protests that have resulted in at least five deaths and numerous injuries. The protests erupted in response to a new tax plan introduced by Ruto’s administration, aiming to raise an additional 302 billion shillings ($2.3 billion) in the upcoming budget year starting July 1.

Controversial Tax Measures

The tax plan, which includes contentious levies such as a 16% tax on bread, has faced significant backlash. Despite some contentious taxes being dropped by lawmakers, protesters continue to demand the complete withdrawal of the plan. The government proposed these new taxes to improve state finances, manage its high debt ratio, and secure more International Monetary Fund (IMF) financing.

While these measures have contributed to the Kenyan shilling becoming the world’s best-performing currency this year, they have also sparked widespread discontent due to rising food prices and a high youth unemployment rate, currently at 67% according to the Federation of Kenya Employers.

Government’s Stance

In a televised address, President Ruto emphasized the government’s commitment to national security, stating, “The government shall treat every threat to national security and the integrity of our state as an existential danger to our republic.” He assured Kenyans of a comprehensive response to the protests, which he labeled as “treasonous events.”

Adjustments and Funding Shortfall

Several proposed levies were scrapped in response to public outcry, including those on mobile-money transfers, banking services, and imports of various goods like diapers and rubber tires. However, duties on products such as batteries, mobile phones, and increased import-declaration fees, as well as higher betting taxes, were retained. Despite these adjustments, Treasury Secretary Njuguna Ndung’u indicated that the government’s concessions would result in a 200 billion-shilling shortfall in finances.

IMF and Austerity Measures

The IMF, which assists countries with balance of payments deficits, often recommends austerity measures that entail short-term hardships for long-term economic stability. These measures have historically sparked unrest, as seen in countries like Indonesia, Argentina, and Morocco. In Kenya, the IMF’s recommendations have made it a focal point of protestors’ anger.

Impact of Protests

The recent protests saw demonstrators overrunning parliament buildings in Nairobi just after lawmakers passed the new tax measures.

Reports indicate that the death toll from the protests could be as high as eight, with at least 31 people injured, including 13 who were shot with live bullets, as reported by Amnesty International.

Future Steps

President Ruto has 14 days to either sign the revised measures into law or request further changes from parliament. To address the financial gap created by the concessions, lawmakers approved an amendment to increase an import tax and proposed a 39% increase in a fuel levy. The Treasury may also consider additional borrowing or new tax measures to manage the nation’s debt, which is approximately 67% of GDP and at high risk of distress according to the IMF.

Under an IMF program agreed upon in 2021, Kenya committed to reducing borrowing, cutting government spending, and increasing revenue collection. This program has positioned the IMF as an unpopular figure in the ongoing protests, with demonstrators denouncing the lender for its role in the economic reforms.