By Patson Chilemba
Energy minister Peter Kapala says the IMF has nothing to do with the removal of fuel and other subsidies, as it was a decision made by government to channel funds to other areas.
But IMF Zambia mission chief Allison Holland, said during the announcement of the $1.4 billion staff level agreement with Zambia, that more details would be given once the programme was approved by the board, adding that reducing the fiscal deficit and removing inefficient subsidies which Zambia had on fuel, power and farming were key goals to the programme.
And when asked why the government would not reinstate the subsidies to lessen the burden on Zambians who have seen the price of fuel increased by K9 in just eight months since the UPND got into office and given the Ukraine crisis, Kapala simply said: “Cabinet has to sit and decide on that.”
Asked by Daily Revelation to explain the steep fuel prices announced by the Energy Regulation Board (ERB), which have seen the the price of petrol rise from K21.96 to K26.50, while diesel has been increased to K26.22 from K21.54, and Kerosen at K19.32 from K15.39, Kapala said the government will be publishing the breakdown to the pump price soon.
Asked if Zambians should anticipate further fuel price hikes as it has now become the trend, Kapala said: “I wouldn’t predict, you never know this war (Ukraine-Russia war) might end today and things might change so we will just review every month.”
“How do you attribute the increment to the war now when there was an increment before the war in Ukraine (The UPND’s initial increment of from K17 to K21 was several months away from the Ukraine crisis)?” the author asked, with Kapala responding: “You don’t understand. Go to ERB they will give you how these things are worked out. They will give you a full breakdown. Sit with them they will show you the trends and what taxes are there, transport costs, inspections and things like that.”
Asked if the price adjustments were linked to the IMF programme with a demand to remove fuel and electricity subsidies, Kapala said the IMF had nothing to do with what is happening with fuel or whatever.
Put to him specifically over the removal of subsidies, Kapala said the removal of subsidies was not an IMF demand.
“This is the government’s position. The IMF have never talked us into going into subsidies. No! It is our decision that we save some money and channel it to other important issues like free education,” Kapala said.
“How about reinstating them now since there is a war going on to lessen the burden on the Zambian masses?” the author asked.
But Kapala said: “Cabinet has to sit and decide on that.”
However, late last year, the IMF reached a staff level agreement of $1.4 billion, three-year extended credit facility, which would bring the heavily indebted country one step closer to a comprehensive debt overhaul.
Finance minister Dr Situmbeko Musokotwane said Zambia was committed to bringing debt to sustainable levels, but that the removal of subsidies would mean price increases, something he said could prove politically contentious.
