NAIROBI, Oct 3 (Reuters) – Kenya’s cabinet on Tuesday ordered all ministries and state departments to cut 10% of their operational budgets for the 2023/24 (July-June) fiscal year, the presidency said.

The East African nation is facing deepening economic challenges due to growing debt repayments, rising interest rates and high taxes that have curbed consumer demand.

“As part of the administration’s fiscal consolidation plan that seeks to contain the fiscal deficit, cabinet sanctioned the reduction of the recurrent budget of each ministry and state department by 10%,” the presidency said in a statement.

The changes will be made through a supplementary budget, it said.

The cabinet also rescinded a government purchase of 60% of shares in Telkom Kenya from London-based private equity firm Helios, the presidency said, escalating a row that erupted after a presidential election in August last year.

The decision seeks to reverse a deal struck in the last months of President Uhuru Kenyatta’s administration, which nationalised the telecoms operator for a price of 6 billion shillings ($40.43 million).

Kenyatta’s administration argued it was necessary to buy out Helios due to the strategic nature of Telkom.

The company is the smallest operator after Safaricom and Bharti Airtel, but it runs some key assets relied on for government communications, including a national fibre-optic network.

President William Ruto’s government has cried foul over the transaction and even opened a parliamentary inquiry into it.

Helios was not immediately available for comment.

($1 = 148.4000 Kenyan shillings) (Reporting by Duncan Miriri Editing by Alison Williams and Mark Potter)