What dropping fuel subsidy means for Kenyans as President Ruto hits ground running

What dropping fuel subsidy means for Kenyans as President Ruto hits ground running

The existing fuel subsidy that was put in place by former President Uhuru Kenyatta was untenable, President Ruto said, and that the country needed a new strategy to cushion Kenyans from the ever rising cost of living.

In his inaugural speech September 13 at Kasarani Stadium, the President said he would drop the subsidy kitty which has hit a record Ksh.144 billion so far with the state having spent Ksh.60 billion in the past four months.

In his inaugural speech September 13 at Kasarani Stadium, the President said he would drop the subsidy kitty which has hit a record Ksh.144 billion so far with the state having spent Ksh.60 billion in the past four months.

“On fuel subsidy alone, the taxpayers have spent a total of Ksh.144 billion, a whopping Ksh.60 billion in the last four months,” said the President.

Should his Kenya Kwanza administration continue with the programme, the taxpayers will have to cough a whooping Ksh.280 billion to June 30, 2023.

This, according to the President, is equivalent to the entire national government development budget.

If the subsidy continues to the end of the financial year, it will cost the taxpayer Ksh.280 billion, equivalent to the entire national government development budget.”

But what does it mean to shelve the subsidy?

Doing away with the fuel subsidy programme the pump prices would hit a record level at Ksh.200 per litre.

Price of a two-kilo of maize flour will also shoot to over Ksh.200, adding more pain to an already high cost of living.

The President’s move to shoot down the fuel subsidy programme coincides with attached conditions the International Monetary Fund (IMF) had lined up in its Ksh.253 billion credit facility early 2021 to help the country recover from the economic shocks brought by the coronavirus pandemic.

In the run up to the August 9 General Election, former President Uhuru Kenyatta introduced an Unga subsidy programme out of which, the government spent Ksh.7 billion in one month, the fact which former Deputy President did not appreciate.

In the run up to the August 9 General Election, former President Uhuru Kenyatta introduced a subsidy programme to cushion Kenyans from high cost of Unga, out of which the government spent Ksh.7 billion in one month, the fact which former Deputy President did not appreciate.

“Additionally, there was an attempt to subsidise maize flour in the run-up to the election, a programme that gobbled up Ksh.7 billion in one month, with no impact.”

He said such programmes are expensive to food producers and are keen to distort markets, thus, creating uncertainty including artificial shortages of the very products being subsidised.

In his short term strategy, the president has already ordered the National Cereals and Produce Board (NCPB) to avail 1.4 million bags of fertilisers to farmers cut across the Eastern, Central and Western regions from next week at a subsidised rate of Ksh.3,500 for a 50 kilogramme from the current Ksh.6,500.

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