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Ugandan police officers detain students marching towards parliament to protest against steep rise in the cost of commodities, in Kampala, Uganda, May 5 2022. Picture: ABUBAKER LUBOWA/REUTERS
Ugandan police officers detain students marching towards parliament to protest against steep rise in the cost of commodities, in Kampala, Uganda, May 5 2022. Picture: ABUBAKER LUBOWA/REUTERS

Uganda won’t introduce fuel subsidies even after pump prices spiked amid supply disruptions partly caused by Russia’s invasion of Ukraine.

Subsidies and lowering the fuel tax would cost government much-needed revenue and increase the need to borrow, Moses Kaggwa, an acting director at the finance ministry, said on Thursday in the capital, Kampala. The Treasury receives 1,450 shillings ($0.41) from every litre of fuel, he said.

On Thursday, police arrested students protesting against the steep rise in the price of goods and services. 

Demand for fuel has rebounded with the reopening of the economy in January after two years of pandemic-driven restrictions. Petrol prices have jumped 19% in 2022 to an average 5,300 shillings per litre.

Landlocked Uganda, which consumes 6.5-million litres of fuel daily, will allow a competitive environment and only intervene if dealers get “abnormal margins”, Kaggwa said.

The reopening of East Africa’s third-biggest economy will boost growth in the year through June to 4.5% and 6% in 2022/2023, partly underpinned by government spending, he said. Uganda is investing in oil infrastructure projects to enable the country to start pumping crude in 2025. With Staff Writer

Bloomberg News. More stories like this are available on bloomberg.com

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