The recent backlash against reforms in Kenya illustrates how reformist leaders face a difficult balancing act between financial market pressure and an increasingly disenfranchised population.
In June, President William Ruto of Kenya rescinded a controversial tax plan and dismissed almost all his cabinet after protesters were killed and parliament building was set ablaze. The bill consisted in a series of taxes including a levy on imports on digital and essential goods. The bill was put forward and voted by parliament despite being widely unpopular. Ruto inherited high debt levels, but rising deficits prompted a move to borrow from international markets to avoid a default.
High debt service costs further convinced the authorities to apply fiscal austerity measures to restore market confidence. In turn, austerity has led to a popular backlash. Ruto is facing a juggle between pressures from financial markets and a population that has become increasingly disenfranchised after several years of high inflation that has eroded households’ purchasing power.
About the author
Rabah Arezki
Rabah Arezki is a former chief economist and vice president at the African Development Bank and former chief economist of the World Bank’s Middle East and North Africa region. He is also the former chief of commodities in the International Monetary Fund’s research department. He is a professor and research director at the CNRS-CERDI, a member of the FERDI's chair working group on the international architecture of financing for development, and a senior fellow at FERDI and Harvard Kennedy School.
