By Fungai Kwaramba
HARARE – Government has hiked fuel prices to raise cash for elections, in a move that could result in a spiral of price increases of basic commodities.
Finance minister Tendai Biti announced the hike on Monday saying motorists have actually been paying more since March 9 when the increase took effect.
Broke and failing to raise money from the international community, coalition partners agreed that Zimbabweans will have to dig deeper into their pockets for the election to go ahead. Biti said government had increased excise duty on fuel by at least 20 percent, a cost likely to be passed on to consumers by suppliers.
He said it will be up to market players to either absorb the extra cost or pass it on to consumers. Industry players said they are already suffocating and would increase fuel prices by at least five cents per litre. Petrol currently sells at between $1,50 and $1,55 per litre while diesel is going for between $1,38 and $1,40.
There are now fears that this will leave cash-poor Zimbabweans worse off given that any fuel price increase drives up the cost of other commodities.
Biti said the increase in duty for fuel is among a cocktail of measures that the coalition government, which has so far raised $31,5 million for the referendum, has put in place to ensure polls are held, most likely in July, despite depleted government coffers.
Biti said government increased excise duty on fuel because Zimbabwe had the cheapest prices in southern Africa. “It has also been unavoidable that government seeks recourse from the ordinary taxpayer.
“Hence, excise duty on diesel and petrol is being reviewed upwards to the following levels for the period March to December 2013,” said Biti in his state of the economy report for February.
Biti said excise duty will increase from $0,20 to $0,25 per litre while petrol will increase from $0,25 cents to $0,30 per litre. Economic experts were however quick to point out that an increase of duty on fuel is likely to have ripple effects on transport costs as well as shore up costs of basic commodities.
Biti said although government has been able to raise funding for the immediate needs of the referendum to the tune of $31,5 million, allowances for polling agents are yet to be guaranteed.
The Zimbabwe Election Commission (Zec), the body in charge of electoral processes in the country, had requested $85 million for a referendum and an additional $132 million for a subsequent general election.
“As a ministry we consider the $85 million request from Zec as being too much. A combination of measures to rationalise payment allowances, containing the period of activities and personnel requirements to the barest minimum will reduce next week referendum requirements to under $75 million,” said Biti.
Apart from streamlining Zec’s requirements and also raising excise duty on fuel, Biti said government has also issued bonds to the National Social Security Authority and property giant Old Mutual to raise an additional $40 million that will also be channelled towards the poll process.
Government is too broke to bankroll a watershed election because of a huge internal debt as well as other commitments that include civil servants salaries. On a monthly basis the bloated coalition government channels about $236 million towards workers’ salaries.
Biti, who said polls are “inevitable” by July this year, emphasised the need to speak with one voice when begging for external funding for the polls. Government had its request for funding for the referendum turned down by the United Nations Development Fund because of late submission. Daily News