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Fuel Increase: Zimbabwe Gvt 'Devalues Own Currency'

Harare - President Emmerson Mnangagwa's government has covertly devalued the surrogate bond notes, after he recently announced fuel pri...

Harare - President Emmerson Mnangagwa's government has covertly devalued the surrogate bond notes, after he recently announced fuel price increases.   

The 150 percent increment triggered massive price increases, with transports fares ballooning by almost 200 percent. Riots have since been reported in most populous suburbs of the country. 

Flanked by his deputy, the under fire premier announced that fuel prices would go up from $3,11 a litre of diesel and $3,31 for petrol from an average $1,32 and $1,38 respectively.

However, the state still maintains that the bond note is equal to the greenback, contrary to black market rates of 1:4. 

“These prices are predicated on the ruling official exchange rate of 1:1 between the bond note and the United States Dollar and also on the need to keep fuel retailers viable.”

The recent price increases were justifiable due to persistent fuel queues, causing massive transport blues over the festive season. 
President ED Mnangagwa Announced Fuel Price Increases Recently  

“Following the persistent shortfall in the fuel market attributable to the increased fuel usage in the economy and compounded by rampant illegal currency and fuel trading activities.

“Government has today (yesterday) decided, with effect from midnight tonight (last night), a fuel pump price of $3,11 per litre for diesel, and $3, 31 per litre for petrol will come into effect,” he said.

To buttress the devaluation theory, foreign missions and registered foreign bodies in Zimbabwe as well as tourists could fuel at designated points at US$1,24 per litre for diesel and US$1,32 per litre for petrol. 

The president claims government will craft measures to cushion workers who have shouldered the burden of steep price escalation.   

“Government is putting in place measures to cushion its workers until a full review of Cost-of Living Adjustment package due in April 2019 is affected in the context of the current budget,” he said.

Ironically, the state has offered a 10 percent salary increment to civil servants, translating to US$4, which the workers denied.

Economists have said, though the increase was welcome, it would trigger massive suffering to the masses.

Renowned  said although the fuel price increase made economic sense, it would bring about some undesired consequences such as increasing the cost of living and pushing up inflation by between 40% and 50%.

“There will be steep increases in other costs. Increasing prices of fuel was the right thing to do. We had a wrong exchange rate. Fuel was too cheap and people from other countries were refuelling in Zimbabwe,” economist John Robertson told NewsDay. 

The renowned economist castigated the artificial exchange rate.

“This was necessary. Unfortunately, (it) has side effects. This will trigger wage demands, inflation 40 percent and 50 percent before long. 

“The companies are not making money already and they will close down. This will lead to serious job losses. They want to run the exchange rate as a privilege to other people. This is fuelling corruption,” he said.

“This is a step in the right direction, but painful because the rising costs are not corresponding with income. The fuel hike will trigger price increases and ordinary Zimbabweans will suffer,” another economist, Emmanuel Mugadza said. 

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