…fear that the record high fuel increase coupled with the depreciation of the Kwacha is likely to increase poverty in the country
By NATION REPORTER
ACTIONAID Zambia (AAZ) has raised alarm at the record high increment in the prices of petroleum products that has seen the price of petrol hitting K34.1 while that of diesel has increased to K32.2.
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Jovina Newanzake, ActionAid Zambia interim Country Director says there is a real possibility that poverty levels would continue rising especially among the already marginalised in the country such as women and the young people as a result of the ever-increasing high cost of living.
Ms Newanzake said the pass-through effect of the increase in fuel prices, coupled with the rapid depreciation of the Kwacha was adversely affecting the country’s inflation rate that had risen to13.2 percent in January and had continued to erode the incomes of households.
She said ActionAid Zambia was therefore refuting the claim by Government that fuel subsidies were only benefitting a minority of the Zambian population.
“A high increase in the prices of petroleum products has therefore been enforced for February 2024. Since the IMF Board approved the SDR 978.2 million (US$ 1.3 billion) in August 2022, their structural benchmark to remove the subsidy on fuel has effectively increased fuel prices by 58.7 percent for petrol and 39 percent for diesel from September 2022,” Ms Newanzake said.
Ms Newanzake said ActionAid Zambia was aware that it was the IMF condition to implement a cost-plus pricing model that was adjusting prices of fuel every 30 days, and reinstatement of VAT and excises taxes on fuel.
“We are also cognizant of the delayed public debt restructuring and its negative effects on the economy. We therefore reiterate our call on the government to ensure the needs of the public are prioritised as they implement the IMF’s structural benchmarks – balancing the protection of citizens with their macroeconomic stability actions,” she said.
Ms Newanzake said the boosting of revenue collection through progressive taxation and the effective restructuring of public debt beyond bilateral creditors had remained crucial for the pricing of petroleum products.
She said Government should ensure that there was an enabling environment for the smooth delivery of social protection programs outlined in the 2024 national budget.
She said it was important for Government to get rid of some previous challenges such as delayed receipts and non-receipt of social cash transfer funds for some eligible citizens.
“There is need for the government to truly foster an enabling environment for local SMEs. With fuel being a key factor of production, the monthly adjustment in fuel prices has reduced business’s ability to forecast, plan, and be profitable,” she said.
Ms Newanzake said Government should therefore increase the pricing cycle for petroleum products and zero rate the VAT applied to cushion the market changes that were otherwise absorbed by poor consumers.
She advised that Government should also consider cost effective alternatives in the oil supply chain such as the already existing TAZAMA pipeline to reduce the transport cost and influence of suppliers in the domestic market.
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