Online Reporter
FOR those travelling to be with family during the current Easter holiday, the pain at the pump was, and still is, real, as rising fuel prices meant travel costs also concomitantly increased.
It, however, could have been worse.
In times of global crisis, there are two kinds of governments: those that react with panic and those that react with precision.
Zimbabwe has chosen the latter.
The decision by Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube to temporarily remove all taxes on diesel — including excise duty, the ZINARA road levy, carbon tax and the Strategic Reserve Levy — is not a sign that fuel has suddenly become cheap.
Far from it.
It is a sign that someone in Harare is paying close attention to the world map, reading the geopolitics and acting before the panic sets in.
Here is the reality Zimbabwe is navigating: the Strait of Hormuz, the narrow neck of water through which more than 20 percent of the world’s oil transits, is effectively closed.
Iran has declared it will remain closed to vessels from the United States and Israel, and even tankers not explicitly targeted are hesitant to sail because insurers are running for cover.
Brent crude has shot past US$100 a barrel, up from around US$70 before the conflict began, and diesel free-on-board prices have jumped by over 33 percent in a single review period.
Had Zimbabwe done nothing, diesel would today be retailing at US$2,65 per litre.
Instead, by absorbing the tax component of US$0,54 per litre, the Government has kept the pump price at US$2,11.
That is not cheap.
But it is the difference between an economy that keeps moving and one that seizes up entirely.
Make no mistake: This is a costly intervention.
The Government itself describes it as a “deliberate and significant fiscal sacrifice”.
Every litre of diesel sold now comes with a revenue hole that must be filled elsewhere.
But the calculus is straightforward.
Diesel powers the agriculture sector that must plant the next harvest.
It runs the mining haulage trucks that dig Zimbabwe’s minerals out of the ground. It keeps the manufacturing sector humming and the buses moving.
When diesel sneezes, the entire economy catches pneumonia.
Sometimes, the smartest budget is the one that sacrifices revenue today to protect revenue tomorrow.
And Zimbabwe is not alone in this calculation. Across the region, Zambia has suspended VAT and excise duty on fuel imports for three months, declaring the fuel supply situation a national emergency.
South Africa slashed its general fuel levy for a month.
Further afield, Vietnam has suspended environmental protection taxes on petrol, diesel and aviation fuel, while Brazil has temporarily suspended taxes on diesel, and countries including Croatia, Hungary, South Korea and Thailand have set price caps on fuel.
The Government in Harare is not acting in isolation; it is acting in very good company.
But tax relief alone is not enough.
A Government facing a global supply shock has two jobs: keep prices from exploding and keep fuel from disappearing altogether.
Zimbabwe is doing both.
The Zimbabwe Energy Regulatory Authority (Zera) has confirmed that the country has more than three months’ worth of fuel stocks in the supply chain, from the Beira corridor to inland storage facilities.
And anticipating that the crisis could drag on, the Government has already authorised the importation of diesel by road, complementing the existing pipeline and rail systems.
Supply routes not affected by the Middle East conflict are being opened up.
The message is clear: This administration intends to keep the lights on and the wheels turning, even as the world burns around it.
Of course, there will be those who point to the pump price and complain.
They are entitled to their opinion, but not to a selective memory.
Before the conflict erupted, diesel was retailing at US$1,52 per litre.
Since then, it has climbed to US$2,11.
That is a painful increase for any household or business.
But consider the alternative.
Without the tax suspension, diesel would be at US$2,65.
Without the Government’s active management of supply routes, there might be no diesel at all.
In a world where the Strait of Hormuz is a shooting gallery, Zimbabwe has managed to keep its economy afloat.
No one pretends this is sustainable forever. The tax suspension is temporary.
The global oil market remains febrile.
And the geopolitical temperature in the Middle East shows no sign of cooling.
But for now, Zimbabwe has done exactly what a responsive, circumspect government should do: It has absorbed the shock, protected the productive sectors and bought itself time.
The lesson is simple.
In a storm, you do not complain about the rain.
You trim the sails and keep the ship moving. And that is precisely what Zimbabwe is doing.
