The Ministry of Finance has said government cant do anything to help solve the problem of skyrocketing commodity prices in the country since this is experienced by the entire world.
Prices for a number of commodities have in the past two months gone up at terrific speed but this has been partly blamed on the ongoing Russia-Ukraine war.
A number of people have however asked government to waive taxes on fuel whereas others suggested fuel subsidies as a solution to tame the rising commodity prices.
Addressing journalists on Thursday, the Ministry of Finance Permanent Secretary, Ramathan Goobi explained that all those suggestions will not help the situation.
“We are not going to subsidise anything. Subsidies don’t work and that is bad economics. Those who have done it have faced problems. Subsidies tend to take money to wrong people and not those you intend . Mafia can organize and take all money for subsidies,”Ggoobi said.
He also noted that government will not control prices of commodities since that is also bad economics that doesn’t work.
Ggoobi explained that controlling prices can lead to creation of a number of unintended practices which is bad for the economy.
“Idi Amin was the first to do it but it backfired. During his time, Uganda was worse off than it is now.If you are not producer of a good, why do you determine its price. Let businesses compete. If businesses overcharge, customers will go away. Some of those who take this opportunity to overcharge consumers will end up burning their fingers. We are not going to control prices,” he said.
The Ministry of Finance Permanent Secretary also said government will not waive tax on fuel , especially import duty , noting that this will deny government revenue it needs to run.
“Waiving tax is not the answer but will create more problems .Government will not have enough revenue but prices continue to be up. The problems(of increased commodity prices) are external. They are worldwide and not only in Uganda.”
Ggoobi however warned that government has to be careful with the measures it undertakes in a bid to solve this situation that 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 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.”
