Zimbabwe to scrap fuel subsidy
ZIMBABWE’S central bank may stop providing the foreign currency needed for fuel imports, handing over the responsibility to private companies, Bloomberg reports quoting unnamed sources.
The move which will end an effective subsidy may take place as early as June 23, when a currency peg is removed and an auction system for foreign exchange is set to begin.
The plan may then be implemented a week or two later when it’s clear how the new system is working.
Bloomberg reports that the move is aimed at saving the government some $100 million of foreign exchange.
The southern African country has been dogged by persistent fuel shortages as the central bank does not have the money to pay for adequate imports.
The central bank currently provides letters of credit each month to fuel-importing companies.
The letters of credit had been issued at a fixed exchange rate of 25 Zimbabwe dollars per U.S. dollar, compared with a black market rate that’s almost four times that.
According to the Zimbabwe Energy Regulatory Authority, the Southern African country requires 1.4 million litres (370,000 gallons) of gasoline and 2.5 million liters of diesel daily.
Source – Agencies