Editorials
Don’t kill the economy in rush to fund budget
Friday November 10 2023
President William Ruto speaking at Parliament on November 9, 2023, during the State of the Nation address. PHOTO | DENNIS ONSONGO | NMG
Kenya on Thursday took a pause to reflect on the State of the Nation through an annual ritual whose climax is the Head of State’s address in Parliament.
As anticipated, President William Ruto put up a spirited fight to show what his administration is doing to make life bearable for Kenyans.
The economy is facing a major test, one year down the line, with a number of measures already put in place failing to achieve their intended outcome.
Six out of seven key economic indicators show that the Kenya Kwanza administration is far from containing the economic crisis that Kenya is facing.
Inflation—a measure of cost of living over a 12-month period—rose for the third consecutive month in October, driven mostly by high fuel prices. However, food prices have begun to fall due to favourable weather.
The shilling is trading at a record low of 151.5 against the dollar. A weak shilling means Kenyans pay more for imports such as fuel, fertiliser and wheat. A weak shilling also inflates the cost of servicing external debt.
Fuel consumption between January and June dropped to the lowest levels in more than five years, excluding the Covid-19 period, amid high pump prices that depressed demand as many people kept cars at home.
A litre of petrol, diesel and kerosene have since crossed the Sh200 mark owing to high crude prices and the implementation of new tax measures, including the 16 percent value added tax (VAT).
Because of this most firms have frozen expansion plans as operating costs rise amid persistent cashflow challenges. The worst hit companies are now retrenching workers.
This is the time to take a pause and review the current economic policies, drop what is not working and support companies to create quality jobs.
