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Last Updated: Friday, 5 September, 2003, 15:19 GMT 16:19 UK
Fuel rationing hits Eritrea
By Jonah Fisher
BBC, Asmara

Petrol pump attendant filling tank
A little petrol now has to go a long way
The Eritrean Government has introduced rationing at its petrol stations restricting private car owners to just over a tank a month.

There has yet to be a full official explanation given for the decision but earlier this year an IMF report warned of the country's declining level of foreign currency reserves and called its monetary and exchange rate system unsustainable.

The usually busy streets of Asmara have almost entirely cleared of private cars as the rationing of fuel bites.

The coupon system first announced a week ago has restricted private cars to just 40 litres a month - just over a tank of petrol - and taxis to 150 litres.

No explanation of the coupon system has been made in the state-owned media here but the head of the petroleum corporation of Eritrea said that it had been brought in to regularise the amount of petrol being consumed and denied that there was a shortage.

Eritrea has no oil of its own and has to buy its petrol using hard currency.

Cash crunch

This is a country heavily dependent on imports - last year it brought in $533m of goods and exported just a tenth of that.

This difference creates a lot of pressure on the foreign currency reserves which are used to fill the gap.

Asmara taxi driver with a petrol coupon
Taxi drivers have a higher allowance but are not happy

According to the International Monetary Fund, the border conflict with Ethiopia which started in 1998 drastically changed the performance of the Eritrean economy - with the government now spending much more than it receives and running up large debts.

Ethiopia used to be Eritrea's largest export market and the fees charged for the use of its Red Sea ports used to bring millions of dollars into the nations coffers.

Both have now totally stopped.

Many African countries have signed stabilisation agreements with the IMF - and agreed to the package of economic restructuring it brings and access to cheap loans.

To such a fiercely independent country, that loss of control has so far proved too bitter a pill for Eritrea to swallow.

A ride in the clouds of Eritrea
09 Jul 03  |  Africa
Eritrea - Turning swords into ploughshares?
10 Jan 02  |  Crossing Continents
Country profile: Eritrea
27 May 03  |  Country profiles

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