The Zambian government is under pressure from the international community and at home to reduce subsidies, which are a sponge that is sucking millions of dollars out of an already strained fiscus. Top of the list for the International Monetary Fund (IMF) are fuel and electricity subsidies. According to the IMF, the fuel and electricity subsidies are “poorly targeted as they benefit mostly the middle and high income groups of the population”. In the case of fuel, 92% of the subsidy is received by the wealthiest 10% of the population, while in the case of electricity close to 85% goes to the richest, the IMF estimates. The richest 10% of the population benefits from 64% of the electricity subsidy, while the poorer half receive 1.5%, which reflects the fact that most of the poor households do not have access to electricity, according to the IMF. This is evident from the number of entrepreneurs selling charcoal and braziers in the cities and countryside.
IMF slates ‘subsidies for the rich’
02 Sep 2019
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