News / National
Zimbabwe losing $4,3 million in monthly revenue
30 May 2026 at 10:00hrs |
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ZIMBABWE could be losing about US$4,3 million in monthly revenue following recent fuel tax adjustments introduced in response to global oil market disruptions, according to a new analysis by Harare-based think tank Africa Economic Development Strategies (AEDS).
The findings come amid ongoing volatility in global energy markets triggered by renewed geopolitical tensions in the Middle East, which have driven fluctuations in crude oil prices and forced several governments to adjust fuel taxation policies.
Zimbabwe is among African economies attempting to balance inflation control with fiscal sustainability as it responds to external fuel shocks linked to instability in global supply routes, including the Strait of Hormuz, through which a significant share of global oil shipments pass.
According to AEDS, the government revised fuel levies in a bid to cushion key productive sectors from rising diesel costs while maintaining some level of revenue from petrol consumption.
"On taxes and levies, prior to the Iran war, the Government of Zimbabwe levies for diesel and petrol stood at US$0,572 and US$0,632 per litre, respectively," the report stated.
"In response to the surge in global fuel prices, Treasury reduced taxes for diesel by 25% — from US$0,572 to US$0,422 — and increased taxes for petrol by 36% to US$0,857 per litre."
The think tank said the policy shift was aimed at easing pressure on industries that rely heavily on diesel, while shifting part of the tax burden toward petrol users, who are largely private motorists.
"A net reduction in expected fuel tax revenue of approximately US$4,3 million per month is expected," AEDS noted, adding that diesel tax cuts accounted for the bulk of the revenue loss.
The report estimated that diesel-related tax revenue fell by about US$16,2 million per month, while increased petrol levies generated an additional US$12 million, partially offsetting the shortfall.
Economists say the structure reflects an attempt by authorities to shield productive sectors from cost-push inflation, given diesel's central role in agriculture, manufacturing and freight logistics.
However, analysts warn that the approach creates fiscal pressure at a time when Zimbabwe is already grappling with constrained revenue inflows and elevated public expenditure demands.
The developments come after a broader continental study by the United Nations Development Programme, African Union, Economic Commission for Africa and African Development Bank ranked Zimbabwe among the countries with the sharpest fuel price increases in early 2026.
The report found that Zimbabwe increased petrol prices by 39,1 percent between February 23 and March 23, 2026 — the highest increase recorded among countries reviewed during the period. Diesel prices also rose by 35 percent, placing Zimbabwe at the top of the continental rankings for fuel adjustments at the time.
Energy sector analysts say Zimbabwe's fuel pricing structure remains heavily influenced by taxes, levies and import-related costs, contributing to higher pump prices compared to regional peers.
Zimbabwe National Chamber of Commerce chief executive officer Chris Mugaga said the country's fuel prices were elevated even before local taxes are applied.
"On FOB price, Zimbabwe is already 20% above the regional average," he said, referring to free-on-board import costs.
He added that excise duties and levies further widen the gap between Zimbabwe and neighbouring countries, while limited access to international balance-of-payments support exacerbates price pressures.
Independent research firm Equity Axis described Zimbabwe's fuel pricing system as a "structural anomaly", noting that fuel is often cheaper in neighbouring Zambia despite transit costs through Zimbabwean territory.
The latest findings come as businesses continue to grapple with high operating costs, including expensive energy inputs, tight liquidity conditions and subdued consumer demand.
Government officials, including those from the Energy Ministry and Zimbabwe Energy Regulatory Authority, were not immediately available for comment on the report.
The findings come amid ongoing volatility in global energy markets triggered by renewed geopolitical tensions in the Middle East, which have driven fluctuations in crude oil prices and forced several governments to adjust fuel taxation policies.
Zimbabwe is among African economies attempting to balance inflation control with fiscal sustainability as it responds to external fuel shocks linked to instability in global supply routes, including the Strait of Hormuz, through which a significant share of global oil shipments pass.
According to AEDS, the government revised fuel levies in a bid to cushion key productive sectors from rising diesel costs while maintaining some level of revenue from petrol consumption.
"On taxes and levies, prior to the Iran war, the Government of Zimbabwe levies for diesel and petrol stood at US$0,572 and US$0,632 per litre, respectively," the report stated.
"In response to the surge in global fuel prices, Treasury reduced taxes for diesel by 25% — from US$0,572 to US$0,422 — and increased taxes for petrol by 36% to US$0,857 per litre."
The think tank said the policy shift was aimed at easing pressure on industries that rely heavily on diesel, while shifting part of the tax burden toward petrol users, who are largely private motorists.
"A net reduction in expected fuel tax revenue of approximately US$4,3 million per month is expected," AEDS noted, adding that diesel tax cuts accounted for the bulk of the revenue loss.
The report estimated that diesel-related tax revenue fell by about US$16,2 million per month, while increased petrol levies generated an additional US$12 million, partially offsetting the shortfall.
Economists say the structure reflects an attempt by authorities to shield productive sectors from cost-push inflation, given diesel's central role in agriculture, manufacturing and freight logistics.
The developments come after a broader continental study by the United Nations Development Programme, African Union, Economic Commission for Africa and African Development Bank ranked Zimbabwe among the countries with the sharpest fuel price increases in early 2026.
The report found that Zimbabwe increased petrol prices by 39,1 percent between February 23 and March 23, 2026 — the highest increase recorded among countries reviewed during the period. Diesel prices also rose by 35 percent, placing Zimbabwe at the top of the continental rankings for fuel adjustments at the time.
Energy sector analysts say Zimbabwe's fuel pricing structure remains heavily influenced by taxes, levies and import-related costs, contributing to higher pump prices compared to regional peers.
Zimbabwe National Chamber of Commerce chief executive officer Chris Mugaga said the country's fuel prices were elevated even before local taxes are applied.
"On FOB price, Zimbabwe is already 20% above the regional average," he said, referring to free-on-board import costs.
He added that excise duties and levies further widen the gap between Zimbabwe and neighbouring countries, while limited access to international balance-of-payments support exacerbates price pressures.
Independent research firm Equity Axis described Zimbabwe's fuel pricing system as a "structural anomaly", noting that fuel is often cheaper in neighbouring Zambia despite transit costs through Zimbabwean territory.
The latest findings come as businesses continue to grapple with high operating costs, including expensive energy inputs, tight liquidity conditions and subdued consumer demand.
Government officials, including those from the Energy Ministry and Zimbabwe Energy Regulatory Authority, were not immediately available for comment on the report.
Source - The Independent
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