PREVIEW
The President has frozen gasoline prices as he tries to balance revenue-saving commitments to the IMF against protests over the cost of living
President William Ruto has executed a small but significant U-turn by unpicking plans to increase the cost of fuel. The Energy and Petroleum Regulatory Authority (EPRA) announced on 14 August that the maximum retail price of a litre of petrol would be frozen at 194.68 shillings (US$1.35) forgoing the planned increase of KSh7.33 a litre.
The fuel and maize subsidies were ended by Ruto shortly after taking office last September, a move welcomed by the IMF as part of many revenue-saving measures (AC Vol 64 No 15, The street takes on State House).
In July, an appeals court threw out a legal challenge to some provisions in the Ruto government's budget bill which doubled the value-added tax on fuel and introduced a controversial new housing levy (Dispatches, 11/7/23, Court blocks housing levy as new taxes bite). The government is clear that Kenyans will face two years of fiscal austerity as it shoulders the burden of debt repayments that are due to peak in 2024.
The raft of new taxes, of which the higher fuel tax and scrapping of the subsidy were among the most painful measures for low and middle income Kenyans, have been seized upon by Raila Odinga's Azimio la Umoja opposition coalition. Odinga has rallied mass public protests arguing that the government's policies are deepening the cost of living crisis. The fuel price freeze may only be a short-term measure but it is a sign that Ruto listening to the voice from the street despite his parliamentary majority.
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