IMF endorses Kenya’s fuel price stabilisation plan to boost economy


The International Monetary Fund has given its approval to Kenya’s fuel price stabilisation plan, which aims to boost the country’s economy.

The plan, introduced by President William Ruto, involves using the resources accumulated in the Petroleum Development Levy Fund to stabilise fuel prices. While there have been varying opinions on whether this constitutes a subsidy, the IMF has stated that it does not breach Kenya’s commitments under the IMF-supported program.

IMF endorses Kenya's fuel price stabilisation plan to boost economy
Fuel inflation was the key driver of overall consumer prices in Kenya in the past year. Image:

The IMF is known for advocating policies that may be unpopular with the general public, such as the taxation of fuel, increased interest rates, and the removal of government fuel subsidies in exchange for financial support.

However, despite these policies, the IMF has provided its support to Kenya’s recent actions to protect consumers from high fuel prices using the PDL Fund.

According to Selim Cakir, the IMF’s Resident Representative in Kenya, as long as the government’s actions are financed by the resources accumulated in the Petroleum Development Fund, they do not violate the government’s commitments under the IMF-supported program.

This endorsement from the IMF gives credibility to Kenya’s fuel price stabilisation plan and reassures investors and the general public that the government’s actions are in line with international financial standards.

In its most recent monthly fuel review, the government implemented measures to curb further increases in fuel prices. This included compensating oil marketers with the price differential, which amounted to Ksh 7.33 (US$0.05) per litre of petrol, Ksh3.59 (US$0.02) per litre of diesel, and Ksh5.74 (US$0.04) per litre of kerosene.

President Ruto has provided clarification on the recent action taken, emphasising that it should not be viewed as a subsidy, but rather as a fuel stabilisation mechanism implemented through the PDL fund. This fund is financed by motorists at a rate of Ksh 5.4 (US$0.03) per litre of fuel.

However, whether this can be classified as a subsidy or simply a fuel price stabilisation plan remains a topic of debate.

According to Ken Gichinga, chief economist at Mentoria Consulting, the government’s involvement in providing cushioning effects suggests that this can be considered a form of subsidy. The key point is that the market price will no longer dictate the fuel costs under this mechanism.

Ericson Mangoli
Ericson Mangoli is the founder and Managing Editor of Who Owns Africa, a platform for African journalism that focuses on politics, governance, and business. With a passion for truth and a dedication to highlighting pressing issues in Africa, Mangoli has become a significant voice in the field. He embarked on this journey after graduating with a degree in communications and realizing his true calling was in investigative reporting and shedding light on untold stories.  Who Owns Africa provides thought-provoking articles, in-depth analyses, and incisive commentary to help people understand the complexities of the region. Mangoli is committed to impartiality and ethical reporting, setting high standards for his team. His vision for the platform is to foster critical thinking and promote informed discussions that have a positive impact on African society. Mangoli is known for his eloquent and insightful writing which tackles pressing issues in Africa. His articles cover a range of topics including political corruption, economic development, fostering international partnerships, and African governance. He sheds light on the complexities of these subjects and empowers readers to engage in conversations for positive change. Mangoli's coverage of African politics analyzes the factors that drive change and hinder progress, while his reporting on governance advocates for stronger institutions and policies. Additionally, he explores the challenges and opportunities facing African businesses and inspires readers to contribute to Africa's economic growth.


Please enter your comment!
Please enter your name here

More Articles from the Author

Most Popular