Tuesday, January 15, 2019

Fuel problems in Zimbabwe

BBC article:

the price of petro has gone up: and it is hurting people


The reason for the hike, the government said, was to avert fuel shortages that have created national angst. The hike means petrol prices rose from $1.24 (£0.97) a litre to $3.31 , with diesel up from $1.36 a litre to $3.11. Zimbabweans were not pleased by these changes, hundreds of them went to the streets of the capital, Harare and the southern city of Bulawayo, to protest against the new prices.

and it has to do with the problem of the Zim currancy:

The sudden increase is symptomatic of price distortions Zimbabweans have to deal with on a daily basis. The price of fuel is fixed by the authorities. Unlike other businesses, fuel stations have to sell petrol at the same price in US dollars and the surrogate currency - bond notes - introduced more than two years ago to address a cash crisis. Thriving black market The government maintains that bond notes, which is only traded in Zimbabwe, is pegged to the US dollar. But the reality of the ground is different. There is a thriving black market where three bond notes fetch one US dollar....

The principal is "bad money drives out good", in other words, one currency will become more desired than the other. In the case of Zimbabwe and the US dollar, the desired currency disappeared as many withdrew their US dollar cash from the bank, and kept the notes under their mattresses. Most banks ran out of it, worsening a biting cash crisis.

Sigh.

And what worried me more it that my friend hasn't written/emailed me for three months: And hasn't picked up the money that I sent her via western union for three months either. Is she sick? Is there a problem in the bank?

Sigh.

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