Zimbabwe Increases Fuel Prices As Shortages Worsen

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Zimbabwe Increases Fuel Prices As Shortages Worsen July 26, 2000

Rangarirai Shoko PANA Correspondent

HARARE, Zimbabwe (PANA) - The Zimbabwean government, battling a rising oil debt, raised fuel prices by an average 24 percent Wednesday which economists said would spark a new inflation spiral.

The state-owned National Oil Company of Zimbabwe, which has wrung up an accumulated debt of nearly 10 billion Zimbabwe dollars to oil suppliers, said the increases were necessary to meet rising importation costs.

The biggest increase, of 128 percent, was for paraffin widely used for cooking and lighting by low-income earners.

The oil company is raising five billion Zimbabwe dollars at the moment on the local market through bonds to retire part of its debt, which is partly blamed for the fuel shortages which the country has experienced since the beginning of the year.

The government says a critical shortage of foreign currency the country was facing was the main reason Zimbabwe could not import enough fuel to meet its needs.

Economists said the fuel price increases, the first of several planned, would trigger a new inflation spiral as other sectors of the economy "pass on the cost."

"We are definitely going to see prices of everything going up. Manufacturers are already so hard pressed to be able to absorb this," a bank economist said.

Economists said year-on-year inflation, estimated to be around 60 percent, was likely to shoot up to more than 70 percent in the next three months as the effects of the fuel price increases trickle down.

Zimbabwe has a credit limit of 45 million US dollars with a Kuwait fuel supplier, and Oil Company said the price increase was needed because the country had almost exhausted the facility.

http://www.africanews.org/PANA/news/20000726/feat28.html

-- Martin Thompson (mthom1927@aol.com), July 26, 2000

Answers

This country seems to be hit especially hard. The socialist government, I suppose.

6

-- Uncle Fred (dogboy45@bigfoot.com), July 26, 2000.


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