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Zimbabwe doubles fuel price as currency crisis hits supplies

Zimbabwe doubles fuel price as currency crisis hits supplies

Zimbabwe’s price for gasoline is one of the world’s highest after fuel prices would double overnight due to a currency crisis. The weak economy of the southern African nation depends too much from the US dollars, FT reports.

Zimbabwe pays about $100m a month for fuel imports while the US dollars have been the main currency in Zimbabwe since hyperinflation in 2008 destroyed the Zimbabwean currency. On Saturday, President Mnangagwa warned people that petrol and diesel prices would rise to more than $3 a litre in an attempt to contain the queues at gasoline stations across the country. Despite the pledge to make Zimbabwe “open for business” after ending of Robert Mugabe’s era, sitting President made people’s life even worse.

Mr Mnangagwa who came to power in a 2017 military coup said the shortages were “attributable to increased fuel usage in the growing economy and compounded by rampant illegal currency and fuel trading activities” and were “unsustainable”. The political opponents believe that the ruling party linked to fuel cartel and is profiting from the crisis.

Meanwhile, the root cause of the currency crisis is runaway government spending financed by issuing electronic US dollars, such as debt sold to banks, without physical backing, according to economists and investors. Rising circulation of these surrogate dollars, including so-called “bond notes” issued in 2016, has led to hoarding of actual banknotes.

Zimbabwe’s trade union congress called Saturday’s fuel price rise “insensitive and provocative” and urged people across the country to stay away from work in protest.