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As commodity prices surge in Uganda, the government explains why it can't introduce fuel subsidies

As commodity prices surge in Uganda, the government explains why it can't introduce fuel subsidies
  • There will be no fuel subsidies for Ugandans, the government said.
  • This is despite the fact the fuel price has jumped 19% this year alone.
  • Uganda has one of the highest fuel prices in Africa, exacerbated by the ongoing war in Ukraine.

Ugandans who have been waiting on the government to subsidise fuel in order to cushion the effects of skyrocketing prices, have had their hopes dashed. That's because there will not be any fuel subsidies anytime soon.

Moses Kaggwa, who is the acting director at Uganda's Ministry of Finance, explained on Thursday that the government cannot afford to finance a fuel subsidy at this point.

According to him, subsidising the price of fuel would compel the Ugandan Government to borrow money. He also noted that the government cannot afford to do away with the $0.41 tax that is imposed on every litre of fuel purchased by Ugandans.

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Note that the government's insistence on no subsidies is coming at a time that pump price for fuel has already jumped 19%.

The 19% spike in fuel price has been attributed to the ongoing invasion of Ukraine by Russia which has disrupted global crude supply and inevitably pushed energy prices upwards.

An earlier report by Business Insider Africa listed the land-locked country as one of ten African countries with highest petrol prices, alongside neighbours Rwanda and Lesotho, etc.

Although Uganda has some 2.5 billion barrels of crude reserves, it still depends on imports to meet its energy needs. And for a land-locked country, this is an unfavourable economic factor.

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Unfortunately, energy cost is not the only thing that has gone up in the country. As a matter of fact, the prices of other essential commodities and household consumables (including bread) have also spiked.

Amid surging prices, President Yoweri Museveni recently suggested that Ugandans should eat cassava if they cannot afford to buy bread.

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