‘We can control currency but not fuel price’ – Govt says no fuel subsidies amid high taxes
President Emmerson Mnangagwa’s regime which has been controlling its currency for two years says it does not have the capacity to introduce fuel subsidies for people in Zimbabwe amidst a surge fuel prices worldwide.
International oil prices spiked significantly over the past week as global sanctions cripple Russia’s ability to export crude oil following its invasion of Ukraine.
On Wednesday, the Zimbabwe Energy Regulatory Authority (ZERA) raised the price of diesel by 17 cents and petrol by 16 cents, the second sharp increase inside four days.
Diesel was pegged at US$1.68, 24 cents up from the February price of US$1.44, while petrol at US$1.67 per litre is 23 cents more expensive.
Parliamentarians yesterday recommended that the Finance Ministry introduce fuel subsidies, noting that huge taxes which were imposed by the government were also a major contributing factor.
The taxes include FOB charges, freight, duty, the ZINARA road levy, carbon tax, debt redemption, strategic reserve levy, and storage.
But Finance Deputy Minister Clemence Chiduwa said it was government’s position to liberalise the fuel market. He added that subsidies would negatively impact the market.
“As I speak, there is no room to maneuver the budget. We cannot subsidise and it is something that we need to relook at given the situation that is on the ground, what is it that we can do to cushion our people?
“However, in terms of subsidies, the policy trajectory is, we are moving away from subsidies because of their nature and how they have been managed before,” he said.
“Any social intervention that we do has to be targeted. I am not sure how we will manage it because if you remember, there was a time when we wanted to control fuel prices and we lost control. We then allowed the market to determine.
“The reality on the ground is, fuel is moving in tandem with what is happening in the global market and we cannot move against that. If that is the reality that is there, any intervention has to be targeted.
“As I said, we need to look at all the stakeholders involved and see how best we can move forward as a country.”
His sentiments prompted Norton legislator Temba Mliswa to ask him why government had the capacity to control the currency. Government introduced the controversial auction system that weekly dictates the value of the Zimbabwean dollar against foreign currency.
“The system, however, is highly rejected due to the gap between its rate and that of the black-market.
Mliswa urged Chiduwa to come up with a ministerial statement articulating government position.
“I have a point of order Hon. Speaker Sir. Mr. Speaker Sir, I must thank you for indulging Members on this important issue for the country. The Minister of Finance is responsible for a lot of things. You cannot have different strokes for different folks. When it is the currency, you want to control.
“We just heard the Minister saying they did not want to control but the currency they are controlling and they have not allowed it to flow. That is where the problem is. We need a Ministerial Statement on their way forward in terms of stabilisation so that we can deal with this issue conclusively.
“It is so important because that is really where it is Mr. Speaker Sir or else we would not have done our work as Members of Parliament in representing people. This is what is affecting the economy from growing,” Mliswa said.
“They control what they want and do not control what they do not want. They said they did not want to control the fuel pricing but they are controlling the currency, which is the biggest problem. We have constantly said it in Parliament. Allow it to flow.
“To me, it is quite confusing as the most important aspect of the economy, the currency they are happy to control. They want to play the US dollar taxation and promote the Zimbabwe dollar but they are busy taxing in US dollars again.
“So it confuses the entire nation and the monetary policy at the end of the day. A Ministerial Statement is imperative for us to interrogate further.” Nehanda Radio