ZIM lauds govt. for removing subsidies on price of petroleum products

The Zambia Institute of Marketing (ZIM) has extolled government for removing subsidies in the pricing of petroleum products saying the decision to do so was long overdue.

And ZIM has welcomed government’s move to introduce statutory instrument number 32 of 2013 that allows the Central Bank to regulate and monitor foreign exchange flows in order to avoid tax avoidance.

Institute president David Kombe said government cannot continue to subsidise fuel adding that a country cannot have an economy where nearly everything is subsidised.

Mr. Kombe told ZANIS in Lusaka yesterday that government was currently subsidising on fertiliser, maize and many other things.

He said this situation should not continue because money meant for development projects such as the building of roads, schools and hospitals was channelled towards subsidies.

He said government should let the price of fuel go with the market forces so that it can serve resources and channel it to needy sectors such as education and health.

Mr. Kombe has however appealed to the business community especially the transport sector not to take advantage of the increase in fuel prices to exploit consumers.

He said the 20 percent increment in fuel prices cannot warrant an abnormal price adjustment, noting that transporters should be realistic and reasonable as they adjust their prices.

The ZIM president has since urged the business community to explore new ways of doing business by restructuring their organisations and investing in equipment which are energy efficient.

And Mr. Kombe said the signing of statutory instrument (SI) number 32 of 2013 by Finance Minister Alexander Chikwanda will help in ensuring that money realised from  exportation of goods and services by companies operating in Zambia is remitted back home.

He said the SI 32 will force companies to ensure that money that is meant for Zambia is remitted back to the country and hence will result in an increase in foreign exchange coming to Zambia thereby stabilising the local currency.

He said the Kwacha has been fragile of late because companies were not remitting foreign exchange they were making through the exportation of goods.

Mr. Kombe further said the move will help stabilise the Kwacha against international currencies such as the United States of America dollar.

Meanwhile, a Lusaka based economist Oliver Saasa said the removal of subsidies has advantages and disadvantages.

Professor Saasa explained the advantage with the removal of fuel subsidies was that government would be able to serve enough resources which could foster development in the country if prudently used.

He however stated that the increase in fuel prices will also result in an increase in the prices of domestic goods hence impacting negatively on people’s purchasing power.