Friday, 14 October 2016

WE CAN AFFORD FUEL SUBSIDIES, BUT....

The truth is PF management of the economy, which is poor planning and wastefulness, leading to draining of national reserves, damaged the base for the country to sustain subsidies.

And it must be accepted that it would completely be a disaster if the government continued to provide these subsidies on borrowed money, as we already know we are in dare need of an IMF bailout now.

Remember PF had reduced subsidies on fuel just after coming into office and the jubilation all over by PF cadres was that the country would have more money for infrastructure projects. Surprising, the government continued to borrow and embark on projects they could not pay for using money from freed from subsidies.
Now all fuel products have gone up.

PF cadres still believe this measure will easily benefit the economy, release money into the economy to develop infrastructure as well as stabilise the price of fuel as more companies will participate in the importation of the commodity. No! It will not.

The Zambian market, due to other factors in the economy, has never made fuel price increase to benefit anyone let alone production. What it has always done is to increase the cost of production and trigger price increases across the whole economy, leading to high cost of living.

It is economically unrealistic to think of any positive benefits from a rise in fuel by more than thirty dollars in an economy like Zambia that has already got a high cost of labour instigated by the State Imposed Minimum Wage.

All productive sectors will have to find a way to pass the thirty dollars extra cost on fuel on to the consumer so that they can respect the minimum wage to keep the same number of workers on the State Wage and offset other overheads resulting from fuel hikes. 
NN