World Bank praises Ruto on his measures to increase taxes
3 min read
World Bank report praises Ruto on his measures to increase taxes to sustain the economy and lower the GDP ratio
World Bank report praises Ruto on his measures to increase taxes to sustain the economy and lower the GDP ratio.
President William Ruto’s attempts to increase revenue by raising tax rates following his inauguration were lauded in a new World Bank report.
The government’s involvement in preserving the economy and lowering the debt to Gross Domestic Product (GDP) ratio, which presently stands at 67.4%, was highlighted in the report titled Kenya Economic Update, which was published on Wednesday, June 7.
However, the World Bank issued a warning about three dangers that might have hampered the government’s progress in economic recovery: a lack of rainfall, political unrest, and monetary measures taken by the Central Bank.
Heavy rains, however, would improve the production of inexpensive hydropower and raise agricultural yields.
The government should not, however, rely on the seasonal variation in rainfall.
In addition, while the government works to cut greenhouse gas emissions, climate change is acknowledged as a significant obstacle to the nation’s growth profile.
It was noted that the political unrest following the General Election on August 9 had a negative impact on the stability and development of the nation.
From the Central Bank’s austerity measures to assure the steady flow of money into the economy and the achievement of the pricing objectives established by the government, a tighter monetary policy and fiscal consolidation effectively balanced the country’s economic climate.
To put it into perspective, tighter monetary policies enable domestic assets to become more profitable than foreign assets, resulting in capital inflows. This, in turn, makes imports cheaper and hence eases inflation.
World Bank projected Kenya’s inflation rate to decline from 7.6 percent to 5.7 percent between 2024 and 2025. The steps taken by the government to reduce the widening debt levels aided in reducing external and domestic imbalances.
Government issues ultimatums to landlords to surrender rent deposits left by tenants
World Bank report project Kenya’s economy to by 5% this year
Raila declines invitation to share podium with Ruto at National prayer breakfast
Bangladesh Minister advices Ruto on how to solve the high cost of living
“Fiscal consolidation plays a central role in supporting Kenya’s macroeconomic foundations for inclusive and sustained growth,” stated World Bank Country Director Keith Hansen.
The lender also projected that the education, hotels and accommodation, and transport sectors would increase in the post-pandemic era and contribute to the GDP, expected to grow by 5 percent in 2023.
Outgoing Central Bank Governor Patrick Njoroge, on March 30, 2023, predicted Kenya’s economy to expand by 5.8 percent instead of the initial projection of 6.1.
He attributed the disparity to the slower growth in the agricultural sector as the country reeled from the worst drought in four decades, leading to increased prices of basic commodities.
President Ruto defended tax hikes, arguing that the move would create economic stability.
Also read,
EPRA on spot after Ruto deal with Saudi Arabia fails to lower fuel prices
Ruto bows to pressure on 3% Housing Fund levy
Raila unveils strategy to counter Ruto over finance bill 2023
Shakahola forest to be converted to National Memorial site
Follow us
Telegram
