Economic turnaround top expectation for Ruto administration

President-elect William Ruto and his deputy Rigathi Gachagua are taking over reins of government at a time the country is hard-pressed with high cost of living, rising debt and unemployment.

On top of that, the incoming administration is also inheriting billion of shillings in unpaid bills owed to contractors implementing various projects across the country.

Upon taking Oath of Office on Tuesday September, 13, 2022, President William Ruto is expected to begin the implementation of his five year manifesto dubbed the Plan: The Bottom-up Economic Transformation Agenda 2022-2027 with a promise to create jobs, increase income especially among poor households and raise enough taxes that will cut Kenya’s appetite for foreign debt.

High cost of living

As an immediate measure to address the high cost of food items which has seen inflation rate rise to 8.5pc in August from 8.3pc in July, Ruto is expected to announce new measures through executive orders that will ease unga and fertilizer prices.

While speaking in Meru County, the President-elect promised that beginning Tuesday, prices of unga and fertilizer will fall as soon as he is sworn in, much to the joy of many consumers and farmers who have been battling high prices of the commodity for the better part of the year.

Kenya’s food production has taken a hit from drought that has been prevailing in most parts of the country. The situation has further been exacerbated by the Russia-Ukraine war which has disrupted grain and fertilizer supply in the world market.

As a measure to ease the pressure, the current administration has released billions in subsidies to stabilize prices of unga and fertilizer.

The last subsidy on maize meal worth Ksh 8 billion given to millers has already been exhausted with a 2kg pack of unga now back to Ksh 210 from Ksh 100 weeks ago.

The United Democratic Alliance (UDA) Administration is expected to continue with the subsidy programme on fertilizer to all cereals and tea farmers across the country, a move which will increase food production from expected long rains in October this year and stabilize prices.

“We have our tea farmers and the price of fertilizer is about Ksh 6000. I have spoken to officials at the Ministry of Agriculture and I will announce new fertilizer prices because we are beginning a new journey to change agriculture,” said President-elect Ruto.

Kenyans are also holding their breathe on the direction fuel prices will take after Ruto takes office, given that the Energy and Petroleum Regulatory Authority (EPRA) has been tapping the Petroleum Development Levy to stabilize prices.

The price of a litre of kerosene has risen 30.5pc to stand at Ksh 128.86 while a litre of petrol has also gone up 25pc to Ksh 159.94.

Diesel on the other hand has risen 29.8pc to retail at Ksh 140.9 per litre.

Reducing Kenya’s debt binge

Ruto is also inheriting trillions in public debt which was a major feature during campaigns. According to latest data from the Central Bank of Kenya, (CBK), total public debt stood at Ksh 8.6 trillion with domestic debt accounting for Ksh 4.27 trillion and external debt Ksh 4.29 trillion as of May 2022.

While admitting the current state of the economy might not be favourable, the President-elect targets to revamp Kenya’s savings sector to raise sufficient internal resources to meet government expenditure.

“I am looking forward to the day, soon enough, when we can borrow from the savings of the people of Kenya to run our development instead of borrowing from other countries. Current laws have not enabled us have savings,” he said.

World Bank puts Kenya’s gross savings rate at 15pc as of 2020, from a high of 37pc in 1993.

As the Kenya Revenue Authority (KRA) continues to beat revenue targets after slumps occasioned by COVID-19 pandemic, the new administration is also expected to draft new tax measures that will sustain revenue growth.

For the first time in history, KRA revenue collection crossed the Ksh 2 trillion mark after collecting KShs. 2.031 trillion in the Financial Year 2021/2022 from KShs. 1.669 trillion collected in the last FY2020/2021.

President-elect has however urged the authority to ease on its aggressive tax collection measures even has he urge Kenyans to pay taxes.

The new administration is also expected to address the high employment rate through investment in agro-processing and the establishment of the Ksh 50 billion Hustler Fund for small businesses.

The Plan intends to inject Ksh 250 billion into improving the agriculture sector within five years and another Ksh 250 billion for the the Micro Small and Medium Enterprises as an avenue for job creation.

  

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