Fact Checking Ruto New Year Speech

President William Ruto. [PCS] During his address to the Nation for the New Year, President Wiliam Ruto gave a record of his progress in office so far highlighting several achievements on the economic front. The Standard Fact Checked some of the key claims put forward by the President and this is what we found out. Claim: We decided to cut expenditure by up to KShs. 400 billion to reduce our borrowing. According to the Budget Review and Outlook Paper by the National Treasury, total expenditure and net lending in the FY 2022/23 amounted to Ksh3.2 trillion against a revised target of Ksh3.3 trillion. While this represented an underspending of Ksh145.5 billion, it was still higher than Sh3 trillion in expenditure and net lending recorded in the 2021/2022 financial year. Recurrent expenditure in the 2022/2023 financial year stood at Sh2.3 trillion, up from Sh2.1 trillion recorded in 2021/2023 an 8.3 per cent increase, while development expenditure stood at Sh493.6 billion, down 8.6 per cent from Sh540.1 billion recorded the previous year. There was further a delay in the disbursement of project funds and a shortfall in domestic borrowing. This led to a carryover of Ksh77.5 billion indicating that the deviation in expenditure and net lending is much higher than the Sh145.5 billion reported by the National Treasury. The president's claim that the government reduced expenditure by Sh400 billion is thus not true. Claim: We decided to enhance our tax revenues by KShs600 billion to fund our programs and development, so as to safeguard our sovereignty and independence. According to the National Treasury, the first half of the 2022/2023 financial year was marked by slow implementation of programmes and projects due to inadequate revenues. "In part, revenue performance was affected by the general slowdown of economic activities occasioned by the adverse impact of shocks that hit the country," explains the National Treasury. Total revenue collection by the year to June 2023 grew to Ksh 2.3 trillion, a 7.3 percent increase compared to Sh2.1 trillion recorded in the 2021/2022 financial year. This performance was still below target by Ksh118.1 billion on account of shortfalls registered in all taxes. "Tax revenue from the broad tax categories were below their respective targets in the period under review," explains the National Treasury. "Excise duty recorded the highest shortfall of Ksh29.5 billion, followed by VAT on domestic goods and services and other income tax of Ksh24.5 billion and Ksh24.4 billion respectively." The president's claim of enhancing tax revenues by Sh600 billion is thus untrue. Claim: We have triumphed over the threat of economic stagnation and are now in secure space with regard to our sovereign debt obligations. According to documents from the National Treasury, the government planned to borrow Ksh862.9 billion in the 2022/2023 financial year, of which external borrowing was Ksh280.7 billion and domestic borrowing totaled Ksh582.1 billion. At end of June 2023, the National Treasury had raised Ksh740.33 billion, comprising of external borrowing of Ksh301.06 billion (107.2% of the target); and net domestic borrowing of Ksh. 439.2 billion (75.5% of the target). According to the National Treasury, Kenya's public debt levels remain sustainable in terms of debt-carrying capacity. The present value of the external debt to GDP ratio is currently at 29.5 per cent, two points above the 27.8 per cent recorded in 2022 and well below the 40 per cent sustainability threshold. However, the debt service to revenue ratio is currently at 16.6 per cent and expected to hit 24.9 per cent in this financial year, high above the 18 per cent threshold. Similarly the debt service-to-exports ratio currently stands at 22 per cent against the 15 per cent threshold and is expected to hit 31 per cent in this financial year. According to the National Treasury, the international sovereign bond maturing in June this year and the rollover of external commercial loans due in 2025 are to blame for the high debt service to revenue ratio. The president's assertion that the country is in secure space with regard to sovereign debt obligations is thus unproven. Claim: Inflation has reduced to 6.8% and our GDP is growing at the rate of 5.4%, placing Kenya as the 29th fastest-growing economy globally. According to the Kenya National Bureau of Statistics, KNBS, overall year on year inflation stood at 6.6 per cent in December 2023. This was mainly driven by increases in transport, housing, water, electricity, gas and other fuels. This was however lower than 9.1 inflation recorded in December 2022. The president's claim that inflation has reduced is thus accurate. According to the World Bank, Kenya's real GDP expanded by 4.8 per cent in 2022, a deceleration from 7.1 per cent reported in 2021. "Kenya is expected to accelerate slightly from 5 percent in 2023 to 5.2 and 5.3 percent in 2024 and 2025, respectively," explains the World Bank in the latest Africa Pulse report. The IMF also put Kenya's GDP growth for 2022 at 4.8 percent and 5 per cent for 2023. According to the IMF, Kenya's real GDP growth of 5 per cent for 2023 is higher than sub-Saharan Africa's average of 3.3 per cent. The country is further ranked the 31st fastest growing economy when measured by real GDP growth according to the IMF's 2023 index. The president's claim that Kenya is the 29th fastest-growing economy is thus overstated. Claim: We deliberately redirected our focus to support production through incentives in our crops, livestock, and fisheries programs. Today, with the blessing of good weather, these interventions have enabled us to increase our food production by 40%, at a fraction of the previous cost. According to the Kenya National Bureau of Statistics, the agricultural, forestry and fishing sector grew by 6.7 per cent in the third quarter of 2023 The increase was attributed to favourable weather conditions in the first three quarters of 2023. Fruit exports rose by 84.3 per cent from 32,388 metric tonnes in the third quarter of 2022 to 59,684 metric tonnes in 2023. Similarly, vegetable exports and tea production rose by 35.4 per cent and 28.0 per cent to stand at 20,427 metric tonnes and 138,771 metric tonnes, respectively over the same period of time. According to the KNBS, agricultural GDP output increased from Sh2.5trillion in 2021 to Sh2.8 trillion in 2022, reporting a 9 per cent increase in value. The president's assertion that food production grew by 40 per cent is thus unproven.

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