Economist Gift Mugano said that the Government has failed to introduce policies that would protect local industry from the worst effects of rising fuel prices on global markets.
Early this week, the Zimbabwe Energy Regulatory Authority (ZERA) increased the price of petrol to US$1.73 per litre from US$1.68 while the retail price of diesel also went up to US$1.76 from US$1.74 a litre.
Speaking to Business Times, Mugano said it is imperative for the Government to consider scrapping some levies to avert total economic collapse. Said Mugano:
We are going in a one way direction and there is no turning back as it seems like policymakers are passing on the net effects of external shocks without them watering down by means of policy recourse.
It is high time that the government should relook at their pricing model of fuel as they should relook at some tax heads, for example, they should remove the Zimbabwe National Road Administration road levy since we are getting that from the tollgate.
Also, take out the strategic reserve levy for the purposes of reducing the burden on the economy but that is not happening.
He said when fuel prices go up, inflation will inevitably rise, pushing the economy towards a total meltdown. Said Mugano:
The development will only worsen the inflationary pressures which are already giving us a headache.
The economy is going to a point of no return in terms of the total economic meltdown as we are keeping giving poison to a sick person that is in the intensive care unit.
Total economic collapse is imminent with this direction and collapse normally happens on the currency side and would push us into default dollarisation which we said is going to happen in June and now we are heading towards that.
Apex Council secretary David Dzatsunga said another round of price increases will push the poor worker deeper into poverty.