Ndii Says Government-to-Government Fuel Deal Helped Protect the Kenyan Shilling

David Ndii, an economic advisor to President William Ruto, has said that Kenya’s Government-to-Government (G2G) fuel import arrangement played a major role in protecting the country’s currency during a difficult economic period.

Speaking about the impact of the deal, Ndii argued that without the arrangement, the Kenyan shilling could have weakened significantly and possibly fallen to around 180 against the United States dollar. 

He also warned that such a situation might have made it extremely difficult for Kenya to meet its financial obligations, including the repayment of the Eurobond 2024.

According to Ndii, the G2G fuel deal helped ease pressure on the country’s foreign exchange reserves at a time when Kenya was facing serious economic challenges.

He explained that importing fuel is one of the biggest uses of foreign currency for the country.

When fuel is purchased using large amounts of dollars from the market, it can quickly reduce the supply of foreign currency and push the local currency down.

Under the Government-to-Government fuel arrangement, Kenya was able to import petroleum products through agreements with international oil companies under structured payment terms.

The system allowed the country to spread payments over time instead of requiring immediate large dollar payments from local oil marketers.

Ndii said the arrangement reduced the demand for dollars in the local market, helping stabilize the exchange rate and protect the value of the shilling.

At the time the deal was introduced, Kenya was experiencing rising demand for foreign currency while global economic conditions were also becoming more challenging.

“The pressure on the shilling was very high,” Ndii explained in his remarks. “Without the G2G arrangement, the exchange rate could have moved to around 180 shillings to the dollar.”

He further noted that a weaker shilling would have made it much more expensive for the government to repay external debts.

One of the major financial concerns facing the country during that period was the repayment of the Eurobond that matured in 2024.

If the currency had weakened significantly, Kenya would have needed far more shillings to raise the dollars required to repay the debt.

According to Ndii, this could have created serious financial stress for the government and increased fears of a possible default.

Defaulting on international debt can damage a country’s reputation in global financial markets and make it more difficult and expensive to borrow money in the future.

Because of this, maintaining stability in the exchange rate was considered very important.

The Government-to-Government fuel deal has attracted both support and criticism from different groups.

Supporters say it helped stabilize the currency and ensured steady fuel supply during a challenging economic period.

Critics, however, have raised concerns about transparency and its long-term effects on the fuel market.