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Subsidies Exceed ten times Budget Intended

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Subsidies have seen a high expenditure of up to ten times in the first nine months of the current financial year than earlier budgeted for the entire year.

Reasons alleged to be due to the effects of a sharp rise in prices of key commodities that are essential to the people.

The data from the National Treasury indicates the government has dished out sh34.16 billion in subsidies in nine months as of March, while the budget for the entire fiscal year is Sh2.87 billion.

The state spent Sh5.62 billion in subsidies in the first quarter of the financial year followed by Sh12.32 billion in the second quarter an increase that later tripled to sh34.16 billion by end of the third quarter.

This was when the high fuel and fertilizer prices evidently forced the government to avail emergency funding with an aim to cushion the customers.

Treasury in a statement said, “In March 2022, inflation decreased to 5.6 percent from 5.9 percent in March 2021, mainly due to easing electricity and pump prices following government interventions.”

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In explaining the expenditure, the budget revived the subsidy scheme for cooking gas allocating sh471 million in the fiscal year that started in July with the amount to probably see an increase to sh820 million in the fiscal year starting July 2023.

The government also last month set aside Sh5.7 billion to subsidize 2.28 million 50-kg bags of fertilizer for farmers.

This is meant to support the cultivation of 1.13 million acres, with farmers paying Sh2,800 per bag compared to a market price of Sh6,400.

Treasury Cabinet Secretary Ukur Yatani, in the draft budget released last November, included a plan to distribute 300,000 six-kilogram gas cylinders to low-income households over the next three years.

 

Under the initial subsidy scheme, the beneficiaries were to pay a discounted price of Sh2,000 in three years for the burner and cylinder, with refills offered at Sh840 ($7.64) at the time.

Through this revival of the LPG subsidy, the households will be relieved majorly from the pressures of the present high prices of gas and refill.

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