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Kenya Reduces Budget Spending Following Nationwide Violent Protests

Protests swept Kenya in mid-June after the government unveiled a bill imposing a 16% VAT on bread, sugar, transportation, mobile and financial services, foreign currency transactions, along with a 2.5% excise tax on cars and vegetable oil. These measures were in response to the IMF's demands to reduce the budget deficit from 5.7% to 3.3% of GDP.
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Kenya reduced its budget following extensive and violent protests and expects its budget gap to widen to 3.6% of its GDP, according to a Treasury statement.
Previously, Kenya had predicted a budget deficit of 3.3% of GDP. The country now aims to reduce its budget spending by almost 2% to 3.87 trillion shillings (about $30.4 billion) by June 2025. Total revenue is expected to drop to 17.5% of GDP from an earlier estimate of 18.5%.

“[Cancelling the new taxes] created a financing gap of a similar amount and implies that funding of expenditures to the tune of 344.3 billion shillings [around $2.7 billion] is not tenable,” the document read.

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Additionally, ministerial spending has decreased by 6.6% from the originally approved budget. Recurrent Expenditure has decreased by 2.1%, while Development Expenditure has decreased by 16.4%.
The National Government's ministerial budget shows a reduction of 156.4 billion shillings (about $1.2 billion), reflecting a 6.6% decrease, excluding Consolidated Fund Services and County Transfer Allocation, which show a 1.9% decrease.
Deadly protests killed at least 41 people, according to the Kenya Human Rights Commission. The violent turn of the protests forced President William Ruto to send the financial bill back to parliament.