Zambian economist Dr Cosmas Musumali says the recent increment on the fuel pump price in Zambia is reflective of international debt burden on government.
The Zambian government on Monday increased the pump price of petroleum products by between 2.4% and 2.6% in what the regulator said was in line with the policy guidance which allowed for adjustments every 60 days. The increase was attributed to a slight upward adjustment of crude oil on the global market in the last two months and a depreciation of the country’s local currency. The previous adjustment was done on August 7, 2017.
Dr Musumali attributed the pump price increase to government’s over-borrowing and that they were under pressure from the lending countries and institutions such as the International Monetary Fund (IMF) to make repayments.
He said the increase in fuel prices would affect commodity prices and other services such as transport.
“Government has borrowed recklessly and they are looking on how to pay back, and fuel is one of the sources which government is using. And everyone is accessing it anytime and they have to source for money from the fuel sector,” said Dr Musumali.
“This is the government that is having difficulties to meet the conditions of the IMF as they know that it’s hard to borrow right now with high levels of corruption, and increasing the price of fuel is the easiest way you raise resources as you are reducing the high chances of borrowing. And this comes with a number of risks as the prices of commodities on the markets will rise.”
And the Civil Society for Poverty Reduction (CSPR) expressed shock with the decision of the Energy Regulation Board (ERB) to increase fuel pump prices, saying the increment was unjustified as the crude oil prices on the international market remained stable.
CSPR Coordinator, Maxson Nkhoma says the decision to increase fuel prices is ill-conceived and a punishment to Zambians who are currently struggling to make ends meet.
Nkhoma said the fuel increment would have devastating impact on the cost of living for ordinary Zambians as it will also come with a general increase in prices of goods and services.
“It is regrettable that each time fuel increment is made and the percentage increment is always higher compared to reductions,” Nkhoma said.
He said the increment was unprecedented especially that transport costs were expected to increase further next year following the upward adjustment to the presumptive tax as contained in the 2018 national budget.
On Tuesday, ERB announced the price increment of all petroleum products.
ERB vice chairperson Ngande Mwanajiti announced the price increase of petrol from K11.67 ($1.19) to K12.97 ($1.32) per litre while the price of diesel is from K9. 87 ($1.00) to K11.09 ($1.13).
In the region, Zambia is only second to Zimbabwe where a litre of petrol costs $1.36, while diesel costs $1.21.