Ethiopia ends fuel subsidy and increases pump prices

Oct 04, 2008 02:00 AM

Ethiopia removed an annual $ 800 mm fuel subsidy and said the money would be used to stabilise rising food prices.
"The $ 800 mm which the government was spending on fuel subsidies will be channelled to ease the spiralling cost of food grain during the current harvest season," the Ministry of Trade and Industry said.

Ethiopia says the combination of drought and high global food prices have forced prices upwards. It has already imported and distributed 150,000 tons of cereal to ease the shortage.
The ministry said a litre of petrol would now cost 10.15 birr from 9.61 previously. Kerosene is retailing at 8.59 birr from 5.72 birr previously.

Analysts say the subsidy removal may exacerbate inflation which was at 19 % in March, according to government statistics.

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