The bankrupt PF regime now plans to increase the fuel prices possibly by this April month end as a desperate measure aimed at trying to bridge the increasing budget deficit, highly placed PF government sources have revealed.
Sources revealed that the current huge budget deficit and financial stress plus the weakened Kwacha against the US dollar can no longer sustain oil crude feed stocks.
Government sources also revealed that the terminal ailments of President Edgar Lungu plus a possible PF election defeat next year was proving a huge challenge for investors to trust a regime that is perceived to only be in government for a short term.
Sources revealed that Lungu’s poor healthy was further making investors uncomfortable because they were not sure if they are dealing with a president on a longer-term project basis even if he stood and won elections.
“So far a number of huge construction projects embarked a few years ago have been suspended due to lack of money as most of them were not planned at all and contractors are owed huge amounts of money. They should have increased by this time but they are afraid of the forth-coming parliamentary bye-elections, which are mainly urban based, and directly affect the voters in all the areas.
So far the PF Treasury department failed to pay for fuel imports last month and led to Indeni Refinery shut that caused fuel shortages.
“Unless we acquire more unsustainable debts from Chinese government, we will not be able to purchase oil feed stocks and later buy this year’s crop from farmers. Even worse, the cancellation of the mines mineral royalty taxes where they we were hoping to get some revenues has a direct effect on the already approved budget. The headache now is where do we get other financial resources to recover the huge deficit, continue servicing the already mounting international and local debts and smoothly run government with social services such as health and the education sector. That’s why you see even the salaries for civil servants are now a huge challenge. Any amounts raised from Zambia Revenue Authority (ZRA) is now hands to mouth and far not enough,” government sources have revealed.
Sources said attempts to contract debts from the Western world and International Financial institutions such as the IMF and World Bank may prove a challenge because of the already mounting debt position that makes it difficult for anyone to trust we can repay back the money in short-term.
The IMF mission last week equally observed that Zambia’s financial position was in serious crisis and something urgent needed to be done especially an increase in fuel prices
But the PF fears now are that any increase in fuel prices the already weak Kwacha will further push the prices of essential commodities high and may also lead to shortages of some essential commodities on the market as importers will stop bringing items in the country.
“What is happening currently in terms of poor economic performance the direct effects of the poor policies we embarked on when we assumed office where a number of projects were being pronounced without checking the revenue side of it for financing. Even worse, most of the projects, especially the roads were heavily over-priced due to corruption in the construction sector, especially roads. You find that a road or construction project which normally costs K100 million was now priced at K200 or even K300 million which was being given to various individuals in power,” sources at both ministry of Finance and Bank of Zambia have revealed.