William Ruto dismisses most of Kenya's cabinet after deadly riots

William Ruto dismisses most of Kenya’s cabinet after deadly riots

Kenyan President William Ruto has sacked most of his cabinet after deadly protests against his plan to raise more than $2 billion in new taxes,and indicated that he will turn toward a government that could include members of opposition parties.

Ruto has retained his deputy and a senior political appointee, who also deals with foreign affairs, the president said in an address to the nation on Thursday. The move comes after he scrapped plans to impose tariffs on everything from bread to diapers following protests that left at least 41 dead.. Bureaucrats will run the government until a new government is formed, he said.

Given that the unrest has scuppered Ruto’s plan for improve state finances and Moody’s Ratings has downgraded the country’s credit rating to even lower levels,The president is trying to assuage resentment toward his leadership with his latest move. He said he will establish a “broad-based government” to help increase tax revenue and reduce debt.

The new government will implement “radical measures and programs to deal with the debt burden”explore the possibility of increasing domestic resources and revenue, expanding employment opportunities, eliminating waste and unnecessary duplication,” Ruto said. This will help “slay the dragon of corruption, making Kenya’s government efficient, effective and cost-effective,” he said.

Kenya’s Eurobond yields due 2031 fell 12 basis points to 10.35%. That pushed the bond price up 0.5 cent to 97.5 cents on the dollar at 2:14 p.m. in London. The price of dollar bonds maturing in 2032 and 2048 also rose.

The shilling fell as much as 0.3%, its lowest level since June 28. Moody’s cut Kenya’s rating by one notch, from B3 to Caa1as reported earlier this week. The company does not expect the government to introduce significant measures to boost revenue in the foreseeable future, given rising social tensions.

The government had planned to introduce new taxes to help raise an additional 346 billion shillings ($2.7 billion) in the fiscal year that began July 1. Instead, the Treasury will cut spending by 177 billion shillings and borrow the rest.

Kenya’s outlook remains negative, reflecting downside risks related to government liquidity, according to Moody’s.

The last time Kenya had a cabinet made up of members from both the ruling and opposition parties was after a disputed election in 2007,when more than 1,100 people died and 350,000 were forced to flee their homes.

Mwai Kibaki was declared the winner of that vote, which was contested by opposition leader Raila Odinga. Two years before the election, Kibaki dissolved his cabinet after the government lost a referendum on a proposed new constitution.