Kenya’s government will step back from its fuel import credit scheme arranged with two Gulf countries after the International Monetary Fund (IMF) expressed concerns over taxpayers' exposure to currency-related costs.

The government will allow private sector players, including oil marketing companies, banks, and credit insurance providers, to run the scheme, Business Daily newspaper reported, citing Treasury Cabinet Secretary Njuguna Ndung’u.

The official said the government had explained to the IMF that the scheme was a “trade finance arrangement”, with no risks to the Kenyan government.

“There is no end game to this (review) because what we will do is that the government will step back and allow the market to work on its own, with those deferred letters of credit,” Prof Ndungú added.

The scheme concluded between Kenya and the governments of the United Arab Emirates and Saudi Arabia aims to reduce forex pressures by eliminating the spot buying of fuel and delaying the payment estimated at $500 million monthly.

The IMF staff had earlier advised that the import credit scheme should be reconfigured so that the private sector bears all risks.

“Based on April 2023 prices, the total obligation incurred is estimated at around $700 million per month for a total of over $4 billion by the end of September 2023,” the IMF stated.

(Editing by Brinda Darasha;