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Use subsidy savings well – Business Daily

The removal of fuel subsidy is proving to be a controversial move particularly because it is bound to heighten the pressure on the cost of living among consumers.
The new administration led by President William Ruto has been categorical that subsidies are not sustainable. Indeed the reliefs – whether for fuel or maize flour – have been very costly for the taxpayer and have deeply eaten into the exchequer.
Treasury spent a total Sh144 billion subsidising fuel while more than Sh7 billion went into keeping the prices of maize flour at Sh100 per two-kilo bag.
Now that the subsidies are off, consumers are certainly going to face tougher times before things get better. It’s, therefore, incumbent upon the government to act fast to bring down the cost of living.
The new administration has lamented that the Treasury coffers are dry, pointing to the magnitude of the challenge they face.
As the President looks for sources of cash to finance projects that can mitigate the current situation, the starting point could be the savings from the removal of fuel and flour subsidies.
The Treasury is set to save Sh9.49 billion after fully withdrawing a Sh20.5 a litre subsidy on petrol and halving the reliefs on kerosene and diesel to Sh26.25 and Sh20.82 respectively. This is a good amount of cash that can make a difference if prudently utilised.
At this point in time, every cent count if the current high inflation is to be tamed.



Joseph Muongi

Financial.co.ke was founded by Mr. Joseph Muongi Kamau. He holds a Master of Science in Finance, Bachelors of Science in Actuarial Science and a Certificate of proficiencty in insurance. He's also the lead financial consultant.