Online Reporter
Tapiwanashe Mangwiro Zimpapers Business Hub
WHEN global oil prices spiked in April, Zimbabwe faced a stark choice either to let diesel hit US$2.65 per litre and risk crashing farms, mines and factories or sacrifice US$81 million in monthly tax revenue.
The Government chose the sacrifice.
Treasury suspended all taxes on diesel on April 2, and new figures from the Zimbabwe Energy Regulatory Authority (Zera) now show the full cost. In a single month, the Government forewent just over US$81 million.
At the suspended rate of US$0.54 per litre — covering excise duty, the Zinara road levy, carbon tax and the strategic reserve levy — the total revenue lost in April alone reached US$81,25 million.
While diesel is invisible it is, however, essential as it moves maize from farms, hauls ore from mines, and powers trucks that stock shops. A 25 percent price spike would have fed directly into food, transport, and manufacturing costs. As a result, the tax suspension likely kept inflation from jumping three to five percentage points in April alone.
Finance Minister Mthuli Ncube called the intervention a deliberate act of economic stewardship describing it as a significant fiscal sacrifice in the national interest.
The trade-off on one hand protected jobs, stable production, and an avoided inflationary spiral while on the other hand the US$81 million will no longer build roads, pay nurses, or buy medicines.
Zera data shows that 150,45 million litres of diesel were sold in April 2026, the first full month under the tax suspension announced by Finance, Economic Development and Investment Promotion Minister Mthuli Ncube on April 2.
At the suspended rate of US$0.54 per litre, covering excise duty, the Zinara road levy, carbon tax and the strategic reserve levy, the total revenue foregone in April alone amounted to US$81,25 million.
Minister Ncube framed the intervention as a deliberate act of economic stewardship, describing it as Government making a significant fiscal sacrifice in the national interest, prioritising economic stability and the welfare of citizens over short-term revenue considerations.
The taxes suspended collectively represented what would have pushed diesel to US$2.65 per litre, a level authorities determined would have been devastating for the productive sectors most dependent on the fuel.
Economist Ms Gladys Shumbambiri-Mutsopotsi said the intervention was a textbook demand side cushion that achieved its primary objective, but came at a cost the economy will feel beyond April.
“The decision to remove US$0.54 per litre from the diesel price structure was the right call at the right time. Diesel is not a luxury fuel, it runs our farms, our mines, our factories and our trucks. Shielding those sectors from a sudden price spike prevented a cascade of cost push inflation that would have eroded real incomes across the board,” she said.
However, Ms Shumbambiri-Mutsopotsi was equally candid about the fiscal downside.
“The challenge is the timing. Zimbabwe is in an expansionary phase of its economic cycle, we need revenue to fund infrastructure, social services and the very programmes that are driving growth. Forgoing US$81 million in a single month is not a trivial number.
“If the suspension runs for three months, you are looking at a quarter billion dollars removed from the fiscus. That has to come from somewhere and if it is not replaced by growth in other revenue lines, it creates pressure on the budget that will not be invisible,” she warned.
She called on Government to publish a clear fiscal offset plan, noting that transparency on how the revenue gap is being managed would strengthen market confidence.
“We know this was a necessary sacrifice. But the public and investors deserve to know what adjustments are being made to absorb it.”
For Dr Nxaba Ndiweni, an industrialist with interests across manufacturing and logistics, the suspension was not an abstraction, it translated directly into operational relief at a moment when margins were under siege.
“Our fuel bill is one of the largest fixed costs we carry. When diesel threatens to cross US$2.65 per litre, you do not just feel it in transport costs, you feel it in every input, every delivery, every production run,” Dr Ndiweni said.
“The Government’s intervention kept us from having to make very difficult choices about output levels and headcount. I would not understate that.”
He argued that the indirect economic value of the suspension likely exceeds the US$81 million revenue figure.
“When industry keeps running at full capacity, it generates corporate tax, PAYE, VAT and export receipts. A fuel shock that slows production destroys more revenue than the taxes that were suspended. Government understood that calculation, and I think history will vindicate the decision.”
Dr Ndiweni added that the measure boosted business confidence at a sensitive moment.
“Investors and manufacturers need to see that the Government is responsive to real-world conditions. This was a signal that the Second Republic is not ideologically rigid, it acts when it needs to.”
A local manufacturer who spoke on condition of anonymity said the relief was felt immediately in their logistics operations.
“We run a fleet of diesel-powered vehicles for distribution. Our fuel costs dropped in line with the suspension and we were able to hold our product prices steady for the month. Without that intervention, we would have been forced to pass the increase on to consumers, and in the current environment, that would have hurt sales badly,” he said.
The manufacturer said they hoped Government would provide advance notice before reinstating the taxes, to allow businesses to plan.
“We understand the taxes will come back at some point. We just need visibility so we can manage the transition without a shock.”
Zimbabwe’s move was not made in isolation, Namibia reduced fuel levies by 50 percent from April 1, South Africa introduced temporary fuel levy relief from late March and extended it through June, while Zambia suspended excise duty and VAT on petroleum imports across a three month window at an estimated cost of US$200 million.
The regional pattern reflects the severity of the global oil price shock driven by Middle East geopolitical tensions, and underscores that Zimbabwe’s US$81 million monthly sacrifice, while large for its economy, was part of a broader continental response.
Government has said it will continue monitoring global developments and stands ready to act further. No end date for the suspension has been announced, meaning the fiscal cost continues to accumulate.
With April’s figure now confirmed at over US$81 million, the central question for policymakers and for economists is not whether the sacrifice was justified, but how long it can be sustained.
