The Ministry of Finance ruled out subsidizing as it would not solve the problem as the price of commodities continues to increase within the country.
As prices of commodities continue to surge across the whole country, the Ministry of Finance has ruled out the option of subsiding saying that it will not help solve the problem.
For now close to three months, prices of commodities from food items to fuel have skyrocketed with the government reiterating that the hike is necessitated by the ongoing war between Ukraine and Russia.
With the hope that the government can resort to applying means including subsidisation to help reduce the burden on Ugandans, the Finance Ministry Permanent Secretary, Ramathan Ggoobi has ruled out the idea saying that it usually comes with underlying challenges.
“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. Mafias can organize and take all money for subsidies,” Ggoobi told journalists on Thursday.
Ggoobi also ruled out the aspect of price control saying that government can only set prices for commodities it produces itself and not the other way round because it will inflict a burden on the main producers of the commodities themselves.
“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,” Ggoobi ruled out.
In addition, he said tax waiving is not possible because it will mean the government will not generate its intended revenue.
Ggoobi called for calmness saying that price changes are not only in Uganda but also externally.
“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,” he added saying that at the moment the economy is moody but it will be back to normal soon.
“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.”