Taskforce set up to review Kenya’s fuel prices, IMF
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Government sets up a task force to review fuel prices according to revelations by International Monetary Fund (IMF)
Government sets up a task force to review fuel prices according to revelations by International Monetary Fund (IMF).
According to the IMF, the task force was set up in May this year and is required to publish its ´findings by August 31.
The IMF indicated that the task force’s mandate is to reform fuel pricing decisions to guarantee that domestic prices are always in line with budgeted resources, albeit it has not provided specifics regarding the task force’s expected results.
The IMF has previously questioned Kenya’s use of fuel subsidies, claiming that the intervention was ineffective and inefficient and did not help the country’s most vulnerable citizens.
Kenya had originally scheduled the expiration date for fuel subsidies as October 31 in 2022 as part of its deal with the IMF but then extended this to December 31.
Ruto administration abandoned the subsidy programme, citing the need to subsidize production rather than consumption, after fuel subsidies in 2022 cost taxpayers Sh19 billion a month.
“Despite some initial delays, a task force was established in May 2023 to review the fuel pricing mechanism and ensure that fuel pricing decisions are always aligned with budgeted resources.
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“While the review of the pricing mechanism has commenced, the delays in establishing the task force have affected the timeline for the review of the fuel pricing mechanism.
The findings of the task force are now expected to be publicly announced by the end of August 2023,” said the IMF report following the completion of the fifth review of Kenya’s current loan programme.
The IMF now says that the Attorney General’s office has indicated that the legal arrangement underlying the government-to-government credit-based arrangement will not lead to an increase in Kenya’s public debt position.
“The National Treasury should limit fiscal risks from fuel prices to ensure ´fiscal sustainability. Risks associated with the new oil import regime should be limited by adjusting its design after the initial phase-in period so that all risks are borne by the private sector. Similarly, to reduce risks to the budget, changes to the mechanism for setting pump prices should ensure that fuel price decisions are always aligned with budgeted resources,” the IMF report said.
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