Here's the reason why Kenya has come under IMF scrutiny

The IMF expresses concern over Kenya's fuel subsidy plan
The bank cited financial risks and questioned the viability of the reintroduction.
The global lender also highlighted potential budget distortion and delayed implementation.

As reported by The East African, a publication focused on East African affairs, The International Monetary Fund has pushed back against Kenya’s plan to re-instate the fuel subsidy program.

The IMF noted that Kenya may not be able to pay oil marketers, leading to budget distortion. Additionally, the bank noted that Kenya's treasury has not yet given the companies the minimum Ksh9 billion ($55.6 million) that they are due from the previous year.

The plan to reintroduce fuel subsidies goes against President William Ruto’s initial sentiments on the program. The president had spoken about the absurdity of fuel subsidies, in line with the conditions to access billions of shillings in loans from the Bretton Woods institution, and promised to eliminate the program.

“A liter of petrol and diesel retailed at Ksh217.36 ($1.34) and Ks205.47 ($1.27) respectively in Nairobi in the pump prices announced on October 15 last year as the subsidy prevented prices from shooting to Ksh220.43 ($1.36) and Ksh217.11 ($1.34) respectively,” according to the East African’s report.

Nevertheless, the global lender took issue with the use of the subsidy since it was one of the new requirements stipulated by the bank as part of a 38-month budget support scheme.

“The lengthy process in forming the task force and the publication of its decision (review of fuel pricing to ensure decisions are aligned to available funds) resulted in a delayed implementation of the structural benchmark," the IMF disclosed.

“This reflects the need for internal consultation on how to finance recent domestic price decisions on October 15 and November 15 which resulted in limited but unbudgeted fuel subsidies (about 0.1 percent of GDP over the two price cycles),” the bank added.

Pump prices reached record highs of Ksh182.70 ($1.13) and Ksh168.40 ($1.04) per liter of super petrol and diesel, respectively, when the subsidy was removed in May 2023.