Low fuel prices boost economic growth

The government’s recent decision to lower fuel pump prices will help keep inflation at bay and provide relief to consumers. Fuel pump prices dropped to Rwf940 after a Rwf60 reduction owing to a fall in oil prices on the international market as well as a reduction in fuel taxes. This decision is in line with the treasury’s proposal contained in the budget for the fiscal year 2011/12 and should provide leeway for the central bank to implement its monetary policy without burdening borrowers with high lending rates. To contain inflationary pressures, the treasury decided to slash fuel taxes by Rwf100 per litre for both petrol and gasoil a move that helped bring down fuel prices; from Rwf1060 per litre to Rwf1040 in July, 2011, to Rwf1000 in September, and now Rwf940. Although Rwanda witnessed the relatively low inflationary pressures throughout last year compared to other countries, keeping inflation under control remains one of the central bank’s top policy challenges due the volatility in regional and global economies. Last year, government also helped reduce sugar prices even as local output remained low, while a post harvest policy has been adopted, including the construction of the storage warehouses and the purchase and storage of surpluses for food security. That said, such coordinated policies, if strictly adhered to will keep the keep the country on track to meet its vision while withstanding the ripple effects of today’s turbulent economies. Ends

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Low fuel prices boost economic growth