All eyes are on President Uhuru Kenyatta after National Assembly Speaker Justin Muturi on Thursday delivered the Finance Bill 2018, which provides for postponement of the 16% fuel tax, to State House.
In a tweet, acting State House spokesperson Kanze Dena confirmed the Bill has been forwarded to the President for consideration even as a public outcry over the high fuel prices continued on the day he made a first public appearance at the launch of police reforms. The President returned from a trip to China on Sunday night.
Nasa leader Raila Odinga had assured that the President will not reject the Bill. Cotu secretary general Francis Atwoli is among those who have also asked the President to act on the issue and has threatened to call a nationwide strike.
The Speaker of the National Assembly @SpeakerJBMuturi has today the 13th of September, delivered the Vellum on The Financial Bill (National Assembly Bill No. 20 of 2018) for consideration by President @UKenyatta.
— Kanze Dena (@KanzeDena) September 13, 2018
Treasury mandarins are burning the midnight oil trying to figure out other options that would seal the budget deficit in the event the fuel tax, first enacted in 2013, is delayed for two more years.
Treasury targets to raise Ksh 71 billion from taxing the petroleum products, attempts which have been termed as insensitive to the common man by politicians and experts.
Amid the public fury, it will not be an easy decision for Uhuru because if he signs the Bill, he risks sending the country into the bad books of the International Monetary Fund (IMF), which has put into question the country’s credit worthiness due to the ballooning public debt which stands at a mind-ruffling Ksh 5.1 trillion.
The government had struck an agreement with IMF to raise funds internally after the institution raised the red flag over the government’s borrowing appetite and budget deficits.
Kenya also secured a six-month extension in March of the $989.8 million arrangement, agreed in 2016 to help cushion the economy in case of unforeseen external shocks that could upset the balance of payments
That facility, which has expired and on Thursday, Treasury Cabinet Secretary Henry Rotich said the government is still engaged with the Bretton Woods institution seeking its renewal even as he downplayed the impact of a non-renewal.
Rotich told reporters the expiration of the programme was not unusual, since Kenya has had more than a dozen such programmes over the last 15 years that came and went.
“There is nothing unique about any programme ending. I think what’s important is that we did have a very successful two-year programme, which is now coming to an end,” Reuters quotes the CS as telling the reporters after a meeting on the budget.
The shilling weakened by as much as 0.3% from Wednesday’s close after news of the expiry of the facility with IMF, forcing the Central Bank to intervene through the sale of dollars to banks in the afternoon.
Talks with the Washington-based fund were now focusing on the next type of facility the country can secure, Rotich said.
Apart from the fuel tax, IMF was also pushing for a repeal of the interest rates cap law, which MPs also s**t down.
- Additional reporting by Reuters.