FUEL INCREMENT SHOULD HAVE TAKEN A GRADUAL PROCESS!

THEmarginal incre ment poised on fuel or petroleum sub sector will automatically result in the sharp chang es, especially on the cost scales of production and on the delivery processes of goods, works and services.

This will also suddenly trigger an upward adjust ment measure across all meaningful economic activities.

The sad reality is that prin cipally during this season the production of both goods and services turn to slow down, coupled with expectations of the fourth wave of Covid-19.

We are all aware by now that the Energy Regulation Board (ERB) has hiked the fuel pump prices on petrol from K17.62 to K21.60 and on the diesel from K15.29 to K20.15.

This move may eventually generate low patterns of eco nomic growth contrary to the current economic directions, especially given the fact that we will be running on an ex pansionary budget.

The fiscal policyholders have given so much on the table in this week (December pronouncements which in cludes increased wage bill).

Considering the shape of the country’s resource enve lope, and to the contrary, we will be running the economy on a contractionary mone tary policy stance pegged at nine percent for accessibili ty to credit, in which we are projected to see the fiscal side anchoring macroeconomic stability.

With variables regulat ing within the normal range of targets on fundamentals such as forex and inflation, where inflation is estimated with some good expectations to be within the acceptable forecasts by mid-year of 15 percent as it takes edging to wards nine percent by 2023.

Secondly, we expect money market patterns to perform normally. Expectations are quite high on the foreign exchange market to contain just within the range of K18 to K19 for this 2022 budget to fully remain functional without seeing it running away from the fiscal target lines on the expenditure columns.

As much as we support the IMF’s cause to aid in stimu lating economic process, we should have completed the oil procurement audit so that we could avoid economic leakages.

Before embarking on a direct removal of subsidies for fuel, and electricity in the wake of making market reflective pricing patterns, which is quite an ideal state of affairs where the fuel price were anticipated to take this route, but rushing for it at this time may be perceived as a deterrent factor in meeting up with the expected inflation targets all because the econo my may slow down during January and February.

This is due to seasonal de mands on foodstuff, given the situation that a number of critical policies have been given much attention, prac tically at the same time for implementation to be done in the financial year 2022.

However, with the Zambian case, we all know that fuel and electricity strongly interplay in the mar ket systems, and are critical component as factors of key production in the supply val ue chains.

The worse scenario case is the anticipation of errat ic supply of electricity if the weather for rain patterns does not change to favour us Therefore fostering an in crease in the energy sector at this particular time, should have been subjected to a case of wait and see method to gauge against certain effects, as the increase will definitely affect wider aggregate de mand in the economy espe cially on both consumption and production areas.