Posted 1/19/2024, 9:41:40 AM
Kenya's Oil Import Deal with Gulf States Falls Short of Forex Relief Goals
- Kenya signed an oil supply deal with 3 Gulf state oil companies in 2022 to ease forex pressures, but it has failed.
- The deal allowed Kenya to import oil on credit to address dollar shortages, but it created distortions in the forex market.
- Oil import volumes fell short of agreed minimums, leading to an extension of the deal to 2024 on more favorable terms.
- The government originally blamed the old tender system for forex issues, but the shilling has still depreciated 20% since the Gulf deal started.
- Fuel pricing regulations will be amended to pass on exchange rate risk costs relating to the extended credit period to consumers.