Eritrea lifts fuel restrictions

A little petrol has had to go a long way

The government in Eritrea has lifted restrictions on the amount of fuel people are allowed to buy.

A special system of coupons was introduced at the end of last month limiting car owners to a little more than 40 litres a month - which is just over a tank of fuel.

Taxis were allowed 150 litres.

As a result, the number of cars on the streets of the capital Asmara fell sharply, taxi fares rose and people switched to using public transport.

Foreign currency

Now that people no longer have to use the coupons, things should get back to normal and taxi fares should fall back to where they were.

Eritrea has no oil of its own and needs to import petrol, using scarce foreign currency to pay for these supplies.

A full explanation for the introduction of coupons was not given.

But a government spokesman did say that there were other more important things to spend hard currency on, such as bread for poor people.

Overspending

Earlier this year, a report from the International Monetary Fund warned that Eritrea's foreign currency reserves were declining.

Taxi drivers may have to reduce their fares

The report also said its monetary and exchange rate system was unsustainable.

The border dispute with Ethiopia has affected Eritrea's economy, with the government now spending more than it receives.

Ethiopia used to be Eritrea's largest export market, and Eritrea also imposed fees for the use of its ports on the Red Sea.

That brought millions of dollars into government coffers.

But income from those sources has now stopped.