News / Local
Zimbabwe cuts fuel import bill
13 Jan 2021 at 15:54hrs | Views
Latest fuel imports statistics have justified government's move to scrap subsidies, with analysts happy that the development managed to save the country a lot in foreign currency and plugged arbitrage opportunities.
According to ZIMSTATS, Zimbabwe's fuel import bill between January and December 2020 fell by a massive 80 percent.
Statistics also show that demand per month for a commercial commodity like diesel tumbled from 69 million United States dollars to as low as 14 million United states dollars between January and December 2020.
This could be an indication that artificial demand for the commodity no longer exist as was the case prior to the scrapping of the subsidy.
For economic analysts, the subsidy was not serving its intended purposes and only opened arbitrage opportunities, which government has successfully managed to eliminate.
"The statistics are a confirmation of widely accepted view that there was a lot of fuel subsidies in the economy for some time before this was corrected by elimination of subsidies that were highly unsustainable," said economist, Dr Prosper Chitambara.
Economic analysts Batsirai Matsika also said: "Besides the issue of subsidies there was also the issue of a fixed exchange rate that played a crucial role as players in the fuel sector were getting the US dollar at very uncompetitive rates and because of that they created arbitrage opportunities in the sector."
Availability of fuel is key for the functioning of the local industry, and for analysts, it is important that imported fuel is not abused but used responsibly to increase industrial productivity.
According to ZIMSTATS, Zimbabwe's fuel import bill between January and December 2020 fell by a massive 80 percent.
Statistics also show that demand per month for a commercial commodity like diesel tumbled from 69 million United States dollars to as low as 14 million United states dollars between January and December 2020.
This could be an indication that artificial demand for the commodity no longer exist as was the case prior to the scrapping of the subsidy.
For economic analysts, the subsidy was not serving its intended purposes and only opened arbitrage opportunities, which government has successfully managed to eliminate.
"The statistics are a confirmation of widely accepted view that there was a lot of fuel subsidies in the economy for some time before this was corrected by elimination of subsidies that were highly unsustainable," said economist, Dr Prosper Chitambara.
Economic analysts Batsirai Matsika also said: "Besides the issue of subsidies there was also the issue of a fixed exchange rate that played a crucial role as players in the fuel sector were getting the US dollar at very uncompetitive rates and because of that they created arbitrage opportunities in the sector."
Availability of fuel is key for the functioning of the local industry, and for analysts, it is important that imported fuel is not abused but used responsibly to increase industrial productivity.
Source - zbc
