On Wednesday, June 24, Zimbabwe announced a 150 percent rise in fuel prices following the launch of a forex auction system which eroded the value of the local currency.
According to a notice released by Zimbabwe Energy Regulatory Authority, the price of a litre of diesel jumped 152 percent approximately to ZW$62.77 ($1.12) from ZW$24.93 while petrol shot up 147 percent to ZW$71.62.
Prior to the announcement, the central bank re-introduced forex auctioning on Tuesday, June 23, the first in 16 years after a long battle to stabilize its currency and fight hyperinflation. By the end of the auction, the local currency lost more than half of its value from 1:25 to 1:57 to the U.S. dollar.
Zimbabwe has been facing fuel shortages since 2018 amid a general economic decline in the country. In January 2019, President Emmerson Mnangagwa increased the price of fuel by 150 percent.
According to the Mnangagwa, fuel prices were lower than in other countries in the region, and that some foreigners were buying fuel in bulk in Zimbabwe for resale in neighboring countries. However, the hike in prices has done little to solve the fuel scarcity problem.
The Southern African country is also experiencing years of international isolation which has left the economy in a downturn. In 2019, the World Bank report shows Zimbabwe’s economy contracting by 7.5 percent, with extreme poverty rising to 34 percent or 5.7 million people, while the country faces its worst hunger crisis in a decade.
Adding to the woes is its inflation rate that stood at more than 500 percent at the end of last year. More so, the newly introduced Zimbabwean dollar (ZWL$) has lost most of its value, climate change has crippled the country’s agriculture and electricity generation has left more than half of the population facing food insecurity.
Zimbabwe is in dire need of international intervention, which can only be possible if the country fixes its system and is removed from the United States (U.S.) sanctions list, experts say.