‘‘STOP spending $1 million per day on subsidizing the pump price of fuel because it is unsustainable’’, the Parliamentary Committee on Estimates has urged Government.

Speaking on behalf of the committee, former Vice President Dr Guy Scott told Parliament that the process of migrating to cost reflective fuel pump prices should be expedited.

Government asked Parliament to approve K3.6 trillion as supplementary provision warrant expenditure on fuel subsidy for the remainder of the 2016 fiscal year, translating into $1 million expenditure per day.

Dr Scott said the approval of the supplementary provision warrant was a continuation of the subsidy on the pump price of fuel.

Committee on Estimates chairman Highvie Hamududu had moved a motion on Thursday to adopt the report of his committee on the supplementary provision warrant no. 2 of 2016.

But Dr Scott told the House: “This is unsustainable and your committee, therefore, recommends that the process of migrating to cost reflective fuel pump price be expedited.”

He called for increased austerity in Government operations so as to make savings and reduce the levels of expenditure.

“Both these measures would contribute to easing the pressure on the national Budget,” Dr Scott said.

He said Finance Minister Alexander Chikwanda had explained that the K3.6 trillion


contained in the warrant was the expected total expenditure on fuel subsidy for the remainder of the 2016 fiscal year assuming that there would be no major movements in the exchange rate as such changes could spur further exchange losses and increase the fuel import bill in Kwacha terms. “He (Chikwanda) added that if this expenditure was not incurred, Zambia’s ability to import fuel supplies going forward would be in jeopardy, with dire consequences on both the economy and the day to day lives of ordinary citizens,” Dr Scott said.

He said during the meeting with Mr Chikwanda one of the issues discussed was the availability of funds for the said expenditure.

Dr Scott said the Committee on Estimates was informed by Mr Chikwanda that financing of the expenditure would come from existing budgetary provisions.

He said Mr Chikwanda admitted that the expenditure would entail a significant realignment of both recurrent and capital expenditures.

“Your committee, therefore, strongly urges the Minister of Finance to take measures to ensure that the impact of such realignment on critical services such as health care provision and education is minimised,” Dr Scott said.

He said Mr Chikwanda had explained to the Committee on Estimates that Zambia could not fully benefit from the decline in international oil prices because at the last increment of fuel pump prices, an exchange rate of about K7.5 to a dollar was assumed.

Dr Scott said Mr Chikwanda also started that Government was cognisant of the need to ensure fuel pump prices were cost reflective but that the adjustment would need to be phased over several months so as to cushion the inflationary effects that it could have on the economy as well as on the purchasing power of the citizens.

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