Ministry of Finance gave the biggest statement on rising commodity prices. It said that the ‘government can’t do anything in order to resolve the problems of rising commodity prices in the country’ since the entire world experiences this.
Prices for a number of commodities have gone up at terrific speed in the past two months, but this has been partly blamed on the ongoing Russia-Ukraine war.
However, many people have asked the government to waive taxes on fuel, whereas others suggested fuel subsidies as a solution to tame the rising commodity prices.
While addressing the media houses on Thursday, the Ministry of Finance Permanent Secretary, ‘Ramathan Goobi’, explained that all those suggestions will not be going to help the solution.
According to Ggoobi stated, “We are not going to support anything. Subsidies do not work, and that is bad economics. Those who have done it have faced problems. Subsidies tend to take money to the wrong people, not those you intend. Mafia can organize and take all money for subsidies.”
Furthermore, he stated that the administration would not be going to control the prices of any commodity since that is also bad economics that does not work.
Ggoobi explained that controlling prices can lead to the creation of many unintended practices that are bad for the economy.
First-person was the Idi Amin to do it, but it backfired. During his time, Uganda was worse odd than it is now. If you are not a producer of a good, why do you determine its price? Let businesses compete. If companies start overcharging, customers will go away. Some of those who take this opportunity to overcharge consumers will burn their fingers. We are not going to control prices,” he said.
According to the Ministry of Finance Permanent Secretary, the government will not be going to charge any fuel tax, especially on the import duty, stating that this will deny government revenues it needs to run.
Waiving tax is not the answer but will create more problems. Government still have zero revenues, but prices are still going to be up. The issues of the increased commodity are external. They are worldwide and not only in Uganda.
Ggoobi warned that government has to be careful with the measures it undertakes to solve this situation, which he said is only temporary.
We have to be careful with the medicine we give. You can’t treat cancer with paracetamol. We have to undergo the process of treating cancer. The economy is like a human being. It changes every time. Right now, the economy is moody but will be happy soon.”