•YALUMA

By MAIMBOLWA MULIKELELA –

GOVERNMENT has no intentions  to increase prices of fuel despite rapid depreciation of the Kwacha against other covertible foreign currencies such as the United States Dollar.
Mines, Energy and Water Development Minister Christopher Yaluma said Government would not adjust fuel prices upwards, as the eroding Kwacha has no direct effect on the value of the commodity.
He said in an interview in Lusaka that the cost of crude oil on the international market was constant and would not affect local prices for fuel in view of the weakening Kwacha.
The minister explained that changes in fuel prices could only be effected if there was an increase in the cost of crude oil on the international market unlike in South Africa where fuel prices were dollar based.
The Kwacha which has been under severe pressure from the US dollar, is now trading  between K6.030 and K6.040, on the exchange rate market.
Mr Yaluma assured that the downward trend of the Kwacha will not affect any changes in the cost of fuel as the fluctuations of the Kwacha  did not have a serious influence on the procurement cost of crude oil.
“Unlike in South Africa, there are a number of factors to consider before  increasing fuel prices because ours is totally based on the changes in the cost of crude oil on the international market,” he said.
In view of the depreciation of the Kwacha, the Bank of Zambia (BoZ) has tightened the monetary policy by increasing the statutory reserve ratio as well as policy rate in order to sustain the local currency.
The policy rate was raised to 10.25 per cent from the precious 9.75 per cent, while the reserve ratio was increased from eight per cent to about 14 per cent.
According to BoZ  financial market  director Isaac Muhanga, policy interventions taken by the Central Bank to prevent the Kwacha from further erosion, was likely to take effect by next week.