Treasury Cabinet Secretary John Mbadi has warned that Kenya's shilling could fall to Ksh180 per US dollar if the government-to-government fuel import deal is ended. He spoke on May 23 in Siaya County while defending the arrangement.
Mbadi said the deal allows deferred payments of up to three months, which reduces immediate demand for dollars by fuel importers. Without it, he stated, the shilling would face strain and the exchange rate could move from the current Ksh129 to between Ksh160 and Ksh180.
The cabinet secretary noted that landing costs have risen 80 percent because fuel is now sourced from farther markets due to the Middle East conflict. He added that the government has spent more than Ksh14 billion on subsidies this year, including Ksh6.2 billion in April and Ksh7.7 billion in May.
Mbadi dismissed suggestions that high fuel prices are only a local issue. He described the problem as global and urged against scrapping the current import framework.