Ensure transparency in State agreements
By Editorial.Team, July 12, 2023The surging cost of fuel is hurtling the economy towards a cliff putting the much hyped government-to-government agreement with United Arab Emirates on focus for promising better tidings.
Signed in March to ease the pressure on Kenya’s foreign exchange reserves and strengthen the local currency, the plan has since failed to deliver on promises, as Kenyans continue to face higher costs of living. Moreover, the lack of transparency surrounding the deal raises concerns about accountability. When deals that impact the economy and livelihoods of citizens are made behind closed doors, it not only undermines public trust but also leaves room for speculation.
That officials from the National Treasury and Ministry of Energy travelled to the Middle East to renegotiate clauses in a government-to-government agreement and came back with fixed oil prices at an undisclosed value is now a thorn in the flesh.
The top concern in the March agreement is the undisclosed value of the fixed oil prices, which comes even as the shilling continues to weaken, despite assurances from President William Ruto, Treasury and Central Bank of Kenya that the shilling will soon strengthen.
As it currently stands, Kenyan investors are still hurting from a devalued currency amid fear of losses for those holding dollars following information asymmetry by the State, coupled with a discrepancy between promises and reality.
Much as the government had good intentions in going for the fixed-term agreement, it has now emerged to be costly for consumers, since the country has not benefitted from the drop in global petroleum prices.
Additionally, the recent increase in fuel prices due to a rise in Value Added Tax has further impacted on the cost and even demand for fuel.
It, therefore, behoves the government to enhance transparency and promote accountability in pushing such agreements so as to allow for better decision-making based on market realities and broader consultations.
Such transparency must also entail regular updates on the progress and changes that come out of renegotiations. This will build trust and confidence in the government’s actions and demonstrate a commitment to the people’s welfare.