Deputy President Rigathi Gachagua on Thursday, April 13, warned investors against hoarding dollars stating that they would lose millions from Friday, April 14, after the value of the shilling increases.
Speaking while receiving the first consignment of imported petroleum from the United Arabs Emirates (UAE) under the government-to-government deal, the deputy president stated that the value of the dollar would decrease beginning April 14 while that of the shilling would increase.
According to Gachagua, the importation of oil in shillings relieved pressure on the dollar and allowed for its normal circulation in the market.
“Let me ask all those Kenyans, business people and investors who have been holding dollars for speculation purposes to offload your dollars in the market today and tomorrow. It will go down starting today, tomorrow and the day after.
“It's a piece of honest advice from a truthful man. With what has happened and the 500 million dollars used to purchase fuel every month, the demand for the dollar will come down and the shilling will gain and we don't want Kenyans to lose money," stated Gachagua.
In addition, he reiterated that the government would not subsidise products in the country explaining that it was not a sustainable move.
Instead, Gachagua revealed that the government would subsidise the production of different products that will in turn reduce their cost.
“This is the way to bring down the cost of fuel. That strategy of fuel subsidy is not sustainable. We want to dismiss with contempt those who are calling us and telling us to reinstate subsidised consumption, it cannot work.
“The government will subsidise production because it is sustainable. This is the practical way of dealing with the high cost of fuel and other products in the country,” Gachagua stated.
Further Gachagua stated that the exchange rate of foreign currencies would regain its stability and in turn support economic recovery and the slow growth of public debt.
“The petroleum imports are paid for in dollars which has of late strained the country’s foreign exchange reserves. This has caused difficulty in US dollars liquidity resulting in rapid depreciation of the Kenyan shillings.
“The country will benefit from the accumulation of foreign reserves of approximately Ksh403 billion (3 billion US dollars) in the next six months,” he added.
The DP received 89,191 metric tons of petrol from United Arabs Emirates (UAE) that arrived on board the MV Norddolphin vessel in Mombasa.
In January 2023, Energy Cabinet Secretary Davis Chirchir published the new regulations regarding fuel importation into the country - which involved a government-to-government arrangement for the procurement of oil.
The regulations required oil companies to competitively bid for the deal through the open-tender system.
However, with the current 9-month deal, the 96 companies will be left in the cold and can only seek to bid in 2024.
