New President must eliminate subsidies

In Summary

• The fuel subsidy alone costs over Sh7 billion per month and the government keeps delaying payment

• The national debt has increased from $22 billion in 2013 to $73 billion today

An attendant fuelling a car.
An attendant fuelling a car.
Image: FILE

The election is still balanced on a knife edge but whoever wins will have a tough job dealing with the economy.

The national debt has soared from around $22 billion in 2013 to $73 billion. The GDP to debt ratio is around 70 percent which sucks up forex to pay foreign lenders and undermines the exchange rate.

To make matters worse, the government has got in the habit of subsidising fuel, unga and fertiliser to bring down the cost of living.

This is perhaps understandable in the run-up to an election but it is unsustainable in the long run, especially when presidential candidates have promised to make more cash transfers to needy citizens and to make various education and health services free of charge.

The fuel subsidy alone costs over KSh7 billion per month and government has struggled to reimburse the oil marketers in time. The IMF has made phasing out the fuel subsidy a condition of its budget support.

Whoever is elected President will have five years to implement his vision for a better Kenya. But he will first need to eliminate these unaffordable and unsustainable subsidies to find the necessary room for manoeuvre.

Quote of the day: "No bird soars too high if he soars with his own wings."

William Blake
The English poet died on August 12, 1827

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