By Chinoyi Chipulu
Economist Kelvin Chisanga says the increment in fuel prices will hinder the economic growth of the country.
Speaking in Lusaka yesterday, Chisanga said this increment would swallow the economic gains Zambia had made in recent months.
Chisanga said this kind of uncertainty the business environment was facing had bad repercussions to the growth of the economy.
“It’s quiet inevitable that we are going to see a scenario where the pricey growth will be triggered into most essential commodities and what we are going to see is the spillover effect that will be castigating into all the verticals of the economy because fuel is basically the universal factor which act into production, business operation and economic activities,” he said.
Chisanga said it would be difficult for the country’s economy to stabilise because pump prices had been increased when the country was facing power supply deficit.
“The moment we have an increment of fuel, expect an almost immediate effect to start triggering to all the verticals of the commodities such as the bus fares and prices of essential goods. The growth pattern in terms of effect is going to have an impact even on the attainment of the Gross Domestic Product (GDP) profile,” Chisanga said.
He said at this point, it was difficult to anticipate when the economy would recover owing to the fact that these challenges were difficult to combat.
“When you look at economic growth process as well as the recovery process, this is now going to destruct the goodwill that we should have been able to see. And it’s coming in the midst of power supply deficit on the energy sub sector side and come October, the Kariba dam will completely shut down and with this increment, it will be a difficult situation, meaning even our aggregate ratio in terms of performance levels will go down compared to earlier anticipated figure which now distorts the GDP growth rate that we should be able to see as a composite factor for that angle,” he said.
Chisanga however, said the economy might recover in the long term through the government’s intervention, through the policy relief and stakeholder involvement.
“We have some short measures which are being undertaken, being administered in different form of interventions. Looking at the way we are facing the challenges, it’s good to see that government has also been proactive, as they will be importing power from other countries. And also looking at the intervention Zesco is coming up with diesel powered stations, which is an important key factor on the table. If we can mitigate the dry period before the onset of the rain, it will be a good formulation for us to achieve and we should be able to see that we can anchor some key economic factors in between,” said Chisanga.
The Energy Regulation Board (ERB) has adjusted upwards the fuel pump price for petrol from K31.58 per litre to K33.47 per litre and diesel from K29.34 per litre to K30.05 per litre.
Kerosene has been increased from K26.36 per litre to K27.52 per litre.
ERB board chairperson James Banda attributed the increase to the continued rise in demand emanating from the winner driving season in the Northern hemisphere and global supply concerns due to geo- political tensions in the Middle-East.
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