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Expensive fuel looms as IMF drops support for subsidy

todayJuly 21, 2022 131

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PHOTO: COURTESY

International Monetary Fund Headquarters… | Grunley Construction

 

IMF has set a fresh loan condition requiring Kenya to drop fuel subsidy by October, exposing motorists to a sharp rise in pump prices.

Kenya has since April last year spent an average of Sh7.65 billion monthly to subsidise diesel, super and kerosene, highlighting the adverse impact of the fuel stabilisation programme on the country’s
revenues.

The multilateral lender has inserted the removal of the subsidy under the 38-month budget support scheme, in the list of reforms attached to a Sh270.2 billion ($2.34 billion) loan package.

Without the cushion, petrol prices would have jumped to Sh209.70 per litre from July 15, while diesel would be Sh193.70 in Nairobi, according to the Energy and Petroleum Regulatory Authority (Epra).

However, the agency kept prices at Sh159.20 and Sh193.70 respectively amid the rise in cost of basic items that has become a political headache for President Uhuru Kenyatta as he shepherds his
succession.

Consumer prices in Kenya have rocketed this year and inflation hit a 58-month high of 7.9 per cent in June, taking it beyond the Treasury’s preferred upper limit of 7.5 percent. Government critics have used the high cost of living to portray it as incompetent.

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