A new analysis by Oxfam International has revealed that a deal negotiated between President Uhuru Kenyatta's government and the International Monetary Fund (IMF) is responsible for the high cost of living.
In the analysis released on Tuesday, April 19, the international organisation indicated that 87 per cent of the loan facilities provided by IMF to developing countries included new austerity measures likely to exacerbate poverty as well as inequality.
In Kenya, Oxfam estimates that IMF extended a loan of Ksh265 billion (USD2.3 billion) during the second year of Covid-19 pandemic, with the loan coming with new demands.
One of the demands of the loan was for the country to widen the tax base and this saw Liquefied Petroleum Gas (LPG) and some foodstuffs taxed more, pushing the prices of these commodities to a historic high.
"Kenya and the IMF agreed to a Ksh265 billion (USD2.3 billion) loan program in 2021, which includes a three-year public sector pay freeze and increased taxes on cooking gas and food.
"More than 3 million Kenyans are facing acute hunger as the driest conditions in decades spread a devastating drought across the country," read the analysis from Oxfam.
It was also estimated that 'nearly half of all households in Kenya are having to borrow food or buy it on credit.'
The Oxfam analysis comes barely a week after the National Treasury proposed to raise the excise duty on commodities such as fruit juice, bottled water, and imported potatoes.
The proposal are contained in the Finance Bill 2022 which is awaiting approval by the National Assembly.
Prior, the prices of basic commodities such as milk, bread, cooking oil, and tomatoes among others had recorded a significant increase as of March 2022.
The price of LPG gas had also risen by as much as Ksh1,000 in a span of one year.
Oxfam further noted that the country was likely to freeze or cut public sector wages and jobs.
"10 countries including Kenya and Namibia are likely to freeze or cut public sector wages and jobs, which could mean lower quality of education and fewer nurses and doctors in countries already short of healthcare staff," added the report.
Previously, the high cost of living had been attributed to the ongoing Russia - Ukraine war.
