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More efforts needed to promote economy

More efforts needed to promote economy

The National Bureau of Standards (NBS) says in a report that the drop has been caused by a sustainable decrease of food prices.

The latest development is good news taking into account that the inflation rate that reached a record 19.7 per cent in January, posed a big challenge on the economy which is recovering from both internal and external market shocks.

Despite these achievements, policy makers need to ensure that other factors that push up the inflation are contained. Oil imports coupled with high food prices have always been pushing up the inflation rate. Food alone accounts for 60 per cent on the high inflation rate.

This means that the national economy will continue to suffer if proper measures are not put in place to ensure food and oil prices remain relatively low at all times. That can only happen if oil prices go down to make transport costs affordable to farmers.

Worse still, the bulk oil procurement system (BPS) introduced in January, this year has failed to yield the positive results by bringing down fuel prices to around 20 per cent, as propagated  by  the Energy and Water Utilities Regulatory Authority (EWURA).

The world market has continued to dictate terms on the local retail prices with no solution in sight to tame the negative trend. These calls for the government to take a keener interest in the oil sector instead of leaving the task solely to EWURA which has totally failed to cope with the market dynamics.

It’s a fact that the outdated Kurasini Oil Jetty (KOJ) can only handle small and mid-sized tankers with a capacity of less than 38,000 tonnes. This means that bigger ships can not dock at KOJ and this pushes up the price of the commodity due to high demurrage charges.

Economists advise that unless the government doubles efforts to repair the single point mooring (SPM) which can handle bigger ships, retail prices would continue to hurt the struggling economy.

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Author: EDITOR

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