In my recent visit to the United Arab Emirates (UAE), the third-biggest OPEC producer, I learned from Sierra Leone’s Ambassador, based in Abu Dhabi, H.E Siray Alpha Timbo, that the government cut subsidies on fuel nationally this year, and on water and electricity in the capital, Abu Dhabi – a move that affected all foreign Missions based in that capital.
“The resolution is in line with the strategic vision of the UAE government in diversifying sources of income, strengthening the economy and increasing its competitiveness in addition to building a strong economy that is not dependent on government subsidy, said Suhail Al Mazroui, UAE’s Minister of Energy at this year’s World Economic Forum in Davos, Switzerland.
In 2015, The IMF was quoted by the Financial Times in London to have said that petroleum subsidies in the UAE “amount to $7bn a year and are part of a package of energy subsidies that total $29bn, or 6.6 per cent of gross domestic product, and also include support for natural gas and electricity.”
Recently, economists estimate that the removal of subsidies in the second-biggest Arab economy after the Kingdom of Saudi Arabia have saved them billions of Emirati Dirhams.
In neighbouring Kuwait where Sierra Leone is fully represented by Ambassador Ibrahim Bakarr Kamra, the government announced a series of fuel related subsidy reforms early this year, including an 83 per cent increase in higher-quality ultra-premium petrol prices. Lower octane fuels increased by 42 per cent with effect from 1st September this year, Kuwaiti dailies recently published.
They further reported that: “The subsidy cuts will lower current expenditures and bolster government finances dented by the downturn in global oil prices. It is also hoped that the increased prices at the pump will help to reduce the culture of wasteful overconsumption.”
On the other hand, the IMF has also been urging the oil –rich Kuwait to restrain spending on subsidies to make its finances more sustainable in the long term. Neighbouring Bahrain’s cabinet also recently approved cuts to diesel and kerosene subsidies – these moves, according to economists, are necessary steps in the economic recovery of these Gulf States struggling to rein in budget deficits and ease pressure on government coffers ravaged by the decline in oil prices.
Back in Sierra Leone, there were many tongues wagging at the weekend when the pump price of fuel was increased from Le 3,750 to Le 6,000, a difference of Le 2,250. The increase in the pump price comes following the pronouncement by government that it has reached the decision to remove fuel subsidy and use the money to meet other priority needs.
According to Sierra Leone’s Minister of Information and Communications, Mr. Mohamed Bangura, government reached the decision to remove fuel subsidy after the IMF advised that it was losing whopping sums of money to subsidize the pump price of fuel. But the pronouncement of the decision to remove fuel subsidy sparked a lot of debate across the country, given that Sierra Leone had the cheapest fuel price in the four Mano River Union (MRU) States. Some had argued that the removal of fuel subsidy would have a domino effect on the prices of other basic commodities with increase in transport fares.
Others also argued that government should sustain fuel subsidy to avoid price hikes despite the IMF had advised that government was losing a huge sum of money on the pump price of fuel for its citizenry.
But being mindful of the fact that Sierra Leone has a very gullible public and the decision to remove fuel subsidy might play into the hands of unscrupulous compatriots with ulterior sinister motives, the Minister of Information and Communications and his Ministry officials were at work even before the removal of fuel subsidy came into effect at the weekend.
Mohamed Bangura and entourage embarked on a nationwide sensitization campaign on the removal of fuel subsidy and how the money would be expended on key priority areas like school-feeding programme, continue subsidizing school and college fees, among others. In other words, the removal of fuel subsidies will help in the diversification of the economy in other key priority areas that will help in uplifting the lives of our people.
Despite the fact that Sierra Leoneans have been benefiting immensely from fuel subsidy that kept the pump price of fuel constantly low over the last eight to nine years, unpatriotic businessmen and women took advantage of the situation to smuggle fuel into neighbouring Guinea to make more money because of the high cost of pump price of fuel in that country.
According to report, personnel of the Sierra Leone Police (SLP) recently clamped down on fuel smugglers in Kambia and Koinadugu districts which share borders with Guinea. But with the removal of fuel subsidy, it will help discourage smugglers from smuggling fuel into Guinea since the pump price of fuel in both countries could probably be the same price. It may even save more revenue since government would now spend less on security operations along the borders for smugglers.
Although the removal of fuel subsidy will directly affect transport fares, I think the government has behaved rationally in line with the austerity measures it is implementing to address the economic challenges in the country. It won’t be easy to overcome, but as patriotic Sierra Leoneans who care for the development of the country, it is imperative that we fully cooperate with the government to restore the economy to its pre-Ebola status of being one of the fastest growing economies in the world.
If we fully cooperate with the expenditure rationalization measures which are expected to end in the first-six months of 2017, just as we fully supported the Ebola fight with resilience, government will certainly address our economic challenges and our economy will be finally up and running.