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Wednesday, 13 June, 2001, 07:45 GMT 08:45 UK
Fuel prices surge in Zimbabwe
Queues for fuel in Zimbabwe
Petrol shortages are a way of life in Zimbabwe
Massive increases in fuel prices have come into effect in Zimbabwe, with petrol rising by 74%.

New fuel prices (per litre)
Petrol up 74% to $1.38

Aviation fuel up 82% to $1.03

Diesel up 67% to $1.20
The increases, announced by the state-run National Oil Company of Zimbabwe (NOZCIM), are likely to exacerbate problems facing commuters and the transport industry.

Zimbabwe has to import all its petroleum products.

But a dire shortage of foreign exchange has resulted in fuel shortages for more than a year.

NOZCIM last raised fuel prices in November of last year.

According to the AFP news agency, it says the latest rises are down to three factors:

  • Increases in world fuel prices
  • The instability of Zimbabwe's exchange rate
  • Increased costs in areas such as freight charges

Walking to work

Transport costs have risen so severely in Zimbabwe in the last 12 months that, in the capital Harare, many people are forced to walk to work.

Finance Minister Simba Makoni
Makoni - tried to distance government from the violence
Last month, the country's main fuel supplier, Independent Petroleum Group of Kuwait, suspended delivery over non-payment of bills.

In March, South African power utility Eskom, which provides 13% of Zimbabwe's electricity, said Harare would have to pay up-front after defaulting on its debt in 1999.

The rising fuel prices are the latest symptom of the economic crisis facing Zimbabwe.

It owes more than $4.5bn to the African Development Bank, the European Investment Bank, the World Bank and a number of Western countries.

In May, the International Monetary Fund said Zimbabwe was late in its debt repayments.

More violence feared

The current political unrest has severely undermined international business confidence.

Perceptions of Zimbabwe will only be changed by action on the ground not by statements

Iraj Abedian
Standard Bank chief economist
The country's main export, tobacco, has been badly affected by President Mugabe's campaign against tobacco farms owned by white farmers.

Attacks on black businesses run by opposition supporters have further alarmed investors.

They assume the violence will continue, and may worsen, in the run up to presidential elections due to be held early next year.

Finance Minister Simba Makoni tried to distance the government from Zimbabwe's political violence at a major economics conference in South Africa last week.

But many believe the attempt failed.

"Nobody was fooled for a moment - perceptions of Zimbabwe will only be changed by action on the ground not by statements," Standard Bank chief economist Iraj Abedian told Reuters news agency.

Analysts predict the Zimbabwean economy will contract by between 10-20% this year.

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See also:

24 Apr 01 | Africa
Zimbabwe farmers urge devaluation
08 Mar 01 | Europe
'Critical' IMF talks in Zimbabwe
10 Jun 01 | Africa
Farm invasion threatens business
14 Mar 01 | Africa
Sun sets on Zimbabwe tourism
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