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Fuel supply hiccups have characterised Zambia’s fuel price increase on Friday as the southern African country kick-started austerity measures under a $1.4 billion IMF supported economic reform programme.
It was also expected that the fuel price increase would result in manufacturers passing on the development to consumers in the form of price increases for foodstuffs in the margin of up to 15%. This would likely result in inflation creeping up.
The southern African country has already defaulted on Eurobonds and is seeking debt restructuring and has been told by the IMF to drop subsidies and cut public expenditures.
This spells tough times ahead for Zambians as President Hakainde Hichilema’s administration which came into power after defeating former leader Edgar Lungu early this year ushers in austerity measures.
“The Energy Regulatory Board will start reviewing petroleum prices every 30 days. The fuel wholesale and pump prices have been revised upwards for petroleum products … [and] this being an upward price adjustment, we wish to warn Oil Marketing Companies that it is against license conditions to hoard fuel,” said Reynold Bowa, chairman of the Zambian Energy Regulatory Board.
Despite these warnings, supply hiccups on Friday emerged in Zambia, with some filling stations running out of the commodity ahead of the festive season.
Opposition leader, Brian Mundubile criticised the government’s decision to hike fuel prices against the backdrop of promises to lower costs for basic commodities.
In parliament, the government defended the decision to hike fuel prices, saying it was necessary that “to squeeze a boil you don’t have to look kind” or else it will lead “the body to rot.”
Vice president Mutale Nalumango explained that the fuel price increase was aimed at stabilising the Zambian economy as excessing borrowing – which had resulted in the country defaulting – had pushed up its indebtedness.
“It was embarrassing.”