When the targeted subsidy program started, the fuel price gap between the international market and the Ethiopian market was about 40 birr per liter. This gap in prices made it possible for a flourishing black market to develop, and gasoline was being transported illegally into the neighboring countries.
The major goal of implementing the subsidy scheme was to paralyze the illicit market while simultaneously easing the government’s financial strain. In June of last year, the government expended the highest amount of subsidies of 15 billion birr. This has now been reduced to three billion birr every month. The price gap with neighboring countries is likewise shrinking, and the only country with a somewhat larger price gap is Kenya.
The tragic story, I will always miss you, my mother. The fuel subsidy program has been here since the time of Emperor Haile Selassie, and the fuel price locally has never been determined by the international market. The fuel market stabilization fund, which was established to stabilize the market by subsidizing fuel, has been recording losses, especially in recent years.
In recent years, the amount of money spent by the government through the stabilization fund has ranged between 10 and 15 billion birr. The government has spent a total of 187 billion in the form of subsidies up to this point, and that figure might potentially go much higher if the subsidies were stripped away
