ACTIONAID ZAMBIA REFUTES CLAIM BY GOVERNMENT THAT FUEL SUBSIDIES ONLY BENEFIT A MINORITY OF THE ZAMBIAN POPULATION

ACTIONAID ZAMBIA REFUTES CLAIM BY GOVERNMENT THAT FUEL SUBSIDIES ONLY BENEFIT A MINORITY OF THE ZAMBIAN POPULATION

….Expresses concern over the high increment in petroleum prices..

ActionAid Zambia (AAZ) is concerned with the high increment in the prices of petroleum goods.

In a statement, ActionAid Zambia Interim Country Director Jovina Newanzake says the pass-through effect of these changes, coupled with the rapid depreciation of the Kwacha has adversely affected the country’s inflation rate that remains above the targeted upper bound of 9 percent (13.2 percent in January 2024) and continues to erode the incomes of households.

“We therefore refute the claim by the Government that fuel subsidies only benefit a minority of the Zambian population.” Ms Newanzake says.

Shw says a high increase in the prices of petroleum products has therefore been enforced for February 2024. And that since the IMF Board approved the SDR 978.2 million (USD 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.

She adds that her organisation is aware of the IMF’s condition to implement a cost-plus pricing model that adjusts prices every 30 days and reinstatement VAT and excise 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 prioritized as they implement the IMF’s structural benchmarks – balancing the protection of citizens with their macroeconomic stability actions.

The boosting of revenue collection through progressive taxation and the effective restructuring of public debt beyond bilateral creditors remain crucial for this.
The Government must also ensure that there is an enabling environment for the smooth delivery of social protection programs outlined in the 2024 National Budget. It should get rid of some previous challenges such as delayed receipts and non-receipt of social cash transfer funds for some eligible citizens.”

She further says that 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.

“The Government must therefore increase the pricing cycle for petroleum products and zero rate the VAT applied to cushion the market changes that are otherwise absorbed by poor consumers.
The Government must 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.
We fear that poverty levels might continue rising especially among the already marginalized in the country such as women and the young people.” She said.
04.02.2024