Treasury to Spend Ksh1.8 Billion on Crypto Regulations as the Presidency Seek Ksh1.6 Billion for Office Renovations

The offices of President William Ruto and Deputy President Kithure Kindiki are requesting Ksh1.6 billion for refurbishments, including upgrades to State Houses, lodges, and official residences. This follows the reinstatement of non-essential expenditures in the wake of the collapsed Finance Bill 2024, with proposed allocations targeting repairs, communication equipment, and specialized facilities. According to the Business Daily, the move signals a potential return to high spending amidst efforts to tighten tax compliance and increase revenue collection. Refurbishment projects, projected to cost Ksh19 billion by 2027, aim to enhance government facility standards despite ongoing fiscal constraints.

In a report by the Business Daily, the value of currency in circulation in Kenya rose by 6% to Ksh322.77 billion by June 2024, up from Ksh304.47 billion in June 2023, as more Kenyans withdrew funds amid economic pressures. This trend reflects a growing need for liquidity to meet rising costs, with many cutting back on savings and investments to fund day-to-day expenses. The savings rate has dropped significantly, from 75% in 2021 to 56% in 2024, as high interest rates and credit defaults push individuals to alternative financing options. According to a recent survey, one in three Kenyans borrowed to repay loans, highlighting the financial strain on households.

Kenya's private sector credit growth slowed to 4% (Ksh3.8 trillion) in the 2023/24 fiscal year, down from 12.2% the previous year, largely due to currency exchange fluctuations, according to the Central Bank of Kenya's annual report. Key sectors, including manufacturing, trade, and transport, saw significant declines, while business services and other activities posted modest growth. Foreign currency loans, comprising 26% of total credit, faced valuation effects amid shilling depreciation. Capital Business reports that the local currency regained stability after Eurobond repayments and dollar loans, with CBK interventions like raising the Central Bank Rate to 13% to curb inflation and support recovery.

Consumers continue to grapple with high liquefied petroleum gas (LPG) prices despite the government scrapping key taxes in July 2023, including VAT, the railway development levy, and import declaration fees. A 13-kg LPG cylinder now averages Ksh3,190, up from Ksh3,000 in June 2023, even as the shilling strengthens and global LPG prices decline. Officials attribute the situation to market-driven pricing, structural challenges, and a monopoly in import and storage facilities. LPG consumption, however, has surged, driven by government initiatives promoting cleaner energy, including a Ksh3.6 billion project to supply LPG to boarding schools. Despite increased imports, the retail price puzzle persists, highlighting the need for reforms to improve affordability as reported by the Business Daily.

Kenya's Treasury plans to spend Ksh1.8 billion to regulate cryptocurrencies and digital assets, focusing on drafting laws aligned with international standards, consumer protection, and anti-money laundering measures. According to the Business Daily, part of the funding will establish frameworks for monitoring Virtual Asset Service Providers (VASPs) and creating public awareness. The move comes as Kenya seeks to exit the FATF grey list and address risks tied to the growing use of digital currencies. The IMF has urged tighter safeguards for crypto projects in the CMA sandbox, highlighting the need for robust risk management alongside innovation.

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