By Daily Revelation Editor
President Hakainde Hichilema has ordered for a fuel price mechanism that will be predictable and minimize economic impacts of citizens, away from these monthly reviews.
During a recent swearing-in ceremony at State House, Hichilema ordered the new permanent secretary Peter Mumba to devise a fuel price mechanism that will be predictable and minimize economic impacts on citizens.
The position taken by Hichilema is long overdue. We are not just sure why he has had to wait for this long to relook into this monthly review policy, which has been sending shockwaves in the economy as businesses simply can’t plan properly.
We are not sure what could have changed the Hichilema’s mind this time around. Could he have made this decision probably because he foresees further fuel adjustments he feels will further strain him and his administration politically and add more pain on Zambians, if he had maintained the same review mechanism, and therefore wants to preempt that by imposing a once off hefty increment, knowing that despite the initial protestations, people will come around and settle for the same price?
We say so because the Hichilema doesn’t change his mind easily, he’s one person who seems to be very difficult to move from positions he holds.
That the monthly reviews have had a negative impact on Zambians, is not debatable. Apart from the fact that the country has rarely experienced downward adjustments since this same policy was implemented, one will argue that the impact on the economy has been dire, as with every increment comes the high cost of production, with the producers and retailers passing on that cost to the consumers who bear the brunt.
Usually when these fuel prices are adjusted upwards, the upward adjustment in the cost of goods is almost swift, but there is little to no movement during rare occasions when prices have been adjusted downwards. It’s possible that maybe in some little instances when businesses are stingily considering reducing their prices in Ngwee’s during the times fuel prices have been adjusted downwards, before they know it the price has been adjusted upwards again by the government.
The effect of this is that prices in the economy continue rising, and with them the cost of living, whereby someone who was only a few months ago paying K10 on bus fares from Mtendere to town is now having to spend K17.
Hichilema is a little late to the party, as this policy has damaged more stuff in the economy. However, they say it is better late than never.
In addition to ensuring a stable pricing mechanism, there is also need for a reconsideration on subsidies, especially the one on fuel. No one can surely expect to lower the cost of living in a country where fuel prices are this high. At the time of Hichilema’s inauguration into office, the price for petrol was around K17, with diesel going for around K16, but the prices of both commodities are now going for almost K30.
Any country wishing to see a turnaround in economic fortunes must first address critical areas such as production. And production works well in an economy where the production costs are low. However, with fuel prices this high, and so goes any prospects for economic recovery. That worker who has reported for work having spent so much on bus fares on bus fares, will need a pay rise to keep up with the cost of living. The production machines to run will also require more diesel including the vehicles that will transport the goods to the end user. As that cycle continues, companies will fail to sustain their production levels, leading to retrenchments, with other firms permanently shutting down because they simply can’t keep up.
In the process, the government also ends up losing on the tax revenues necessary for providing spending. The end result is that the government is forced to borrow, adding more billions to the mountainous debt and compromising the future of millions of Zambians still living and those unborn.
Subsiding fuel prices is not about subsiding the rich as Finance minister Dr Situmbeko Musokotwane and those in government keep arguing, because high fuel prices affect everybody, including those enjoying free education and meal allowances. Subsidizing necessities is about protecting the welfare of the people. It’s about the security of the nation.
Related
By Daily Revelation Editor
President Hakainde Hichilema has ordered for a fuel price mechanism that will be predictable and minimize economic impacts of citizens, away from these monthly reviews.
During a recent swearing-in ceremony at State House, Hichilema ordered the new permanent secretary Peter Mumba to devise a fuel price mechanism that will be predictable and minimize economic impacts on citizens.
The position taken by Hichilema is long overdue. We are not just sure why he has had to wait for this long to relook into this monthly review policy, which has been sending shockwaves in the economy as businesses simply can’t plan properly.
We are not sure what could have changed the Hichilema’s mind this time around. Could he have made this decision probably because he foresees further fuel adjustments he feels will further strain him and his administration politically and add more pain on Zambians, if he had maintained the same review mechanism, and therefore wants to preempt that by imposing a once off hefty increment, knowing that despite the initial protestations, people will come around and settle for the same price?
We say so because the Hichilema doesn’t change his mind easily, he’s one person who seems to be very difficult to move from positions he holds.
That the monthly reviews have had a negative impact on Zambians, is not debatable. Apart from the fact that the country has rarely experienced downward adjustments since this same policy was implemented, one will argue that the impact on the economy has been dire, as with every increment comes the high cost of production, with the producers and retailers passing on that cost to the consumers who bear the brunt.
Usually when these fuel prices are adjusted upwards, the upward adjustment in the cost of goods is almost swift, but there is little to no movement during rare occasions when prices have been adjusted downwards. It’s possible that maybe in some little instances when businesses are stingily considering reducing their prices in Ngwee’s during the times fuel prices have been adjusted downwards, before they know it the price has been adjusted upwards again by the government.
The effect of this is that prices in the economy continue rising, and with them the cost of living, whereby someone who was only a few months ago paying K10 on bus fares from Mtendere to town is now having to spend K17.
Hichilema is a little late to the party, as this policy has damaged more stuff in the economy. However, they say it is better late than never.
In addition to ensuring a stable pricing mechanism, there is also need for a reconsideration on subsidies, especially the one on fuel. No one can surely expect to lower the cost of living in a country where fuel prices are this high. At the time of Hichilema’s inauguration into office, the price for petrol was around K17, with diesel going for around K16, but the prices of both commodities are now going for almost K30.
Any country wishing to see a turnaround in economic fortunes must first address critical areas such as production. And production works well in an economy where the production costs are low. However, with fuel prices this high, and so goes any prospects for economic recovery. That worker who has reported for work having spent so much on bus fares on bus fares, will need a pay rise to keep up with the cost of living. The production machines to run will also require more diesel including the vehicles that will transport the goods to the end user. As that cycle continues, companies will fail to sustain their production levels, leading to retrenchments, with other firms permanently shutting down because they simply can’t keep up.
In the process, the government also ends up losing on the tax revenues necessary for providing spending. The end result is that the government is forced to borrow, adding more billions to the mountainous debt and compromising the future of millions of Zambians still living and those unborn.
Subsiding fuel prices is not about subsiding the rich as Finance minister Dr Situmbeko Musokotwane and those in government keep arguing, because high fuel prices affect everybody, including those enjoying free education and meal allowances. Subsidizing necessities is about protecting the welfare of the people. It’s about the security of the nation.
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