Fuel subsidies benefit rich people more than the less fortunate – IMF

IMF WEIGHS IN ON IMPACT OF FUEL SUBSIDIES, SCALING UP SOCIAL PROGRAMS

International Monetary Fund (IMF) Resident Representative for Zambia Eric Lautier says IMF research studies have shown that subsidies such as those on fuel benefit rich people more than the less fortunate.

Lautier said subsidies are also not good for climate, especially in the current period where Zambia is struggling with drought.

He said the cost of subsidies is high thereby impacting budget sustainability.

Lautier said spending a large share of the budget on fuel subsidies means that a country cannot afford the needed investment to grow the economy and create jobs.

He said without this reallocation, it would have been difficult for the government to double social spending as a share of GDP, hire more teachers, and health workers, and provide free lunch at school.

The IMF Resident Representative for Zambia said it is, therefore, important to ensure that the support is well calibrated to cushion the impact on people with the lowest real disposable income.

He said to address more pressing issues, the IMF will participate in the Economics Association of Zambia (EAZ) 2024 Economic Summit on July 25th and 26th at Ciela Resort in Chongwe District, Lusaka, where stakeholders will analyze strategies to navigate the disaster and foster economic resilience.

The theme of this year’s summit is “Pioneering Zambia’s Sustainable Economic Transformation through Climate Change Adaptation and Sustainable Financing Mechanisms after Debt Restructuring.”

This is contained in a statement issued by the Economics Association of Zambia (EAZ) Acting Chief Executive Officer Tendai Posiana.