(3 Minutes Read)
The Kenyan Government is set to exit its Government-to-Government (G2G) oil deal that it launched in April 2023, as agreed between Kenya and three national oil exporters from the Gulf
The Kenyan Government is set to exit its Government -to-Government (G2G) oil deal that it launched in April 2023, as agreed between Kenya and three national oil exporters from the Gulf. This agreement was launched by Kenya’s president William Ruto last spring in a bid to stop the free fall of the Kenyan Shilling against foreign currencies. The reason for annulling the agreement seems to be triggered by a report from the International Monetary Fund (IMF) that the scheme has not worked as hoped.
Kenyan Treasury authorities said that the government intended to exit the oil import arrangement due to the distortions it has created in the foreign exchange market. The arrangement led to an increase in rollover risk of the private sector financing facilities supporting it. Treasury authorities further said that it is committed to private market solutions in the energy market. Earlier to the introduction of the G2G scheme, oil trade was done through a system of open tender system in which local companies bid to import oil each month.
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G2G was initially for 9 months. But was extended for another 12 months to December 2024. Now that has been annulled. Since the scheme was launched, the shilling’s value eroded by over 20% against the US dollar, surpassing the historical low mark of shilling 160 to the dollar.
