(Bloomberg) -- Kenyan President William Ruto began appointing a new cabinet, a week after dismissing most of his administration in the wake of deadly anti-government protests.
The president nominated 11 people to the cabinet — six of them from the administration that he fired last week including a former minister as the new attorney general, he said in a televised address in the capital, Nairobi, on Friday. He’s yet to appoint a new finance chief.
The cabinet shake-up is an effort to appease protesters who’ve staged anti-government demonstrations across Kenya for more than a month, opposing tax increases and state corruption and calling for Ruto to step down. At the peak of the protests, hundreds of people stormed parliament, forcing the president to abandon measures aimed at raising more than $2 billion of revenue needed to plug a budget shortfall.
“While the events of the past month have caused tremendous anxiety, concern and uncertainty, the crisis has presented us with a great opportunity, as a nation, to craft a broad-based, and inclusive citizen coalition for national transformation and progress, made up of Kenyans from all walks of life,” Ruto said.
At least 53 people have died in the demonstrations and more than 400 others injured.
The government’s failure to halt the protests has alarmed investors. The shilling posted its biggest weekly drop in two months this week, weakening 1.1% to 130.36, according to data compiled by Bloomberg. The yield on its dollar debt due in 2031 climbed more than 20 basis points in that period to 10.70% by 4:40 p.m. in Nairobi.
Ruto’s administration has been under pressure to shore up tax collection and slash borrowing under a $3.6 billion funding program agreed with the International Monetary Fund to address Kenya’s debt vulnerabilities. At about 70% of gross domestic product, its debt is considered at high risk of distress.
The National Treasury has forecast a wider fiscal deficit for the current budget year after dropping the tax proposals. The guarantee of lower revenue prompted Moody’s Ratings to downgrade its assessment of Kenya’s credit further into junk this month. Other agencies may make similar moves in August due to the prospect of the protests lingering longer, according to Omobola Adu at BancTrust & Co. Investment Bank.
“We see risks to Kenya’s debt-servicing capacity amid high external refinancing requirements and tight liquidity in domestic capital markets,” S&P Global Ratings said in a research note. Kenya will retain access to “sufficient committed funding sources and foreign exchange reserves to mitigate immediate external liquidity risks,” it said.
(Updates with comment by Ruto in fourth paragraph; shilling, bond moves in sixth)
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