Ethiopia is facing the brunt of the anomalous economic condition amid soaring oil prices globally owing to the uncertain global situation.
Amid the ongoing volatile oil prices globally, the phenomenon is igniting mounting concern among Ethiopians who are yet to experience a significant impact of the global fuel price hikes on their day-to-day lives courtesy of a mammoth government subsidy on the imported fuel supply.
The Ethiopian Ministry of Trade and Regional Integration last week said retail fuel prices will remain unchanged until May 8. The subsidy has so far helped to keep the prices of fuel products stable, with a liter of both diesel and gasoline being sold at around 60 U.S. cents, the cheapest in Africa and beyond.
The Ethiopian government, which recently disclosed it had spent in excess of 100 billion Ethiopian birr (about 2 billion U.S. dollars) on fuel subsidies this 2021/2022 Ethiopian fiscal year that started in July 2021, stressed that the huge sum of fuel subsidies, aimed at curbing the soaring cost of living, is hugely impacting the country's economy. It warned that illicit traders are abusing the situation amid intensified fuel contraband to neighboring countries, where the price of fuel is relatively high with little or no subsidies.
Ethiopian Minister of Trade and Regional Integration Gebremeskel Chala, in addressing the Ethiopian House of Peoples' Representatives Tuesday, emphasized that a possible solution to the growing illicit fuel contraband is to bring Ethiopia's fuel price on equal footing with neighboring countries.
Experts argued that while the ongoing huge sum of fuel subsidies is exerting extra financial pressure on the Ethiopian economy, it plays a significant role in terms of controlling inflation and mitigating the economic impact on the daily life of citizens.
"The situation is very tricky. On the one hand, the subsidy is immensely helping the local community and the economy in general while at the same time it is exerting much pressure on the government with growing expenditure," Costantinos Bt. Costantinos, a professor of public policy at the Addis Ababa University in Ethiopia, told Xinhua in a recent interview.
The phenomenon is further complicating the lives of ordinary Ethiopians, who are already being affected by a soaring cost of living.
Melkamu Alemayehu, a public servant who leads a family of four in Addis Ababa, Ethiopia's capital, as the sole income source of his household with a 10,000 birr monthly salary, stressed that the possible fuel price increase would further exacerbate the cost of living crisis in the country.
"We are already struggling with the current soaring cost of living. You can imagine how the situation would look if the price of fuel rises, which normally leads to a sharp increase in the cost of basic items and services," Alemayehu told Xinhua recently.
In addition to uncertainties attributed to the global oil price hikes, Africa's second most populous nation is already witnessing a sharp increase in basic items, which was mainly exacerbated by the shortage of edible oil.
Ethiopia's Ministry of Finance disclosed recently that the country will import 150 million liters of edible oil during the coming three months as part of the efforts to mitigate the rising food prices in the country. The ministry said public enterprises will be involved in the importation of edible oil, a commodity that went relatively scarce in the Ethiopian market during the past month, further adding to the soaring cost of living. A liter of edible oil used to be sold for less than 100 birr but is recently being sold for more than 200 birr.
Amid scarce edible oil supply to the market and the eventual soaring demand, the Ethiopian government had previously dropped taxes and tariffs on imports of all edible oil products, a move being said to address challenges related to the cost of living. The situation nevertheless persists.
Produced by Xinhua Global Service
