[size=30]14 measures to confront the expected insane rise in prices as oil inflammation continues
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Yes Iraq: Baghdad
Like all countries in the world, Iraq is facing additional price inflation due to geopolitical tensions, as well as a significant increase in oil prices, which will eventually lead to higher global transportation wages and production costs, thus inflaming commodity prices.
On this, the oil economist, Nabil Al-Marsoumi, reviewed 14 measures that would mitigate the rise in prices and reduce the effects resulting from it, while he considered that most of them have negative side effects as well.
Among these measures, Al Marsoumi clarified the need to “compensate for the high costs, through the means of material compensation that mitigate some of the effects of the high costs, and it is important to continue working to improve the coverage of the social protection network because it contributes to ensuring assistance to those who really need help.” It is possible to support vulnerable segments of society by allocating a direct grant to be distributed through the ration card or social welfare.”
He considered that "linking the increase in pensions and salaries of civil servants and those with low wages to inflation will contribute to protecting the purchasing power of their incomes and prevent them from falling into poverty. The international experience has shown that such measures are the most effective in protecting the livelihoods of vulnerable groups."
With regard to the second measure, Al-Marsoumi stressed the need to “strengthen the vocabulary of the ration card, especially basic materials, especially flour and oil, and work should be done to create more consumer cooperatives and support them in various forms, including selling them to dollars at an encouraging price lower than the official price.”
Regarding the third measure, Al-Marsoumi referred to “exempting imported food commodities from customs duties, as well as exempting production inputs used in the local production of food commodities.”
He stressed that the fourth measure must "maintain the current government policy that supports fuel prices," as well as "increasing the supply of goods in general takes time, but it will expand the absorptive capacity of the economy."
Locally, Al-Marsawy indicates that “some people suggested raising the value of the dinar, as the increase would reduce imported inflation, but Al-Marsawy indicated that it “has negative effects in many economic sectors, especially in the long run, and government revenues will be negatively affected, because the most important We have oil as an export commodity, and it is priced and sold in dollars.”
Regarding the seventh measure, Al-Massoumi stressed “to encourage competition and combat illegal commercial practices, within the framework of preventing the use of influence to disrupt market power, and governments should work to correct distortions affecting the market as a result of recent events, according to strong systems and regulations.”
With the aim of increasing the real estate supply, Al Marsoumi stressed that “the concerted efforts of the public and private sectors should be expanded in research and overcoming the obstacles to real estate investment and the cost of housing ownership, especially for people with limited income, and in this it works to expand policies and programs to reduce the cost of housing ownership.” But these policies lead to demand for more housing and more government funding. This, in turn, contributes to increasing inflation, or at least it will reverse other efforts to reduce it now and in the near future. As for the long-term, the expansion and development of programs, and the increase in the supply of housing, work to reduce future inflation.”
In his ninth point, Al-Massoumi indicated that “governments’ efforts to contain inflation have traditionally depended on influencing public financial policies, especially tax policies, government spending and monetary policies. At the global level, there is more attention to policies for controlling wages, controlling prices or pricing, encouraging competition and combating illegal practices.” .
He added, "There is a clear defect that requires, in certain cases, government intervention. This government intervention, especially in the pricing of basic commodities in cases other than market failures, requires a large, high-integrity and skilled government apparatus in understanding the market." Global experiences indicated, on the one hand, the weakness of some public officials in a good understanding of the market for specific goods, which caused some vendors and activities to be affected by defects in the formulation of regulations and misapplication, and on the other hand indicated corrupt practices such as the use of maneuvers by some vendors in order to weaken relative in the effectiveness of oversight.
He stressed that "reducing current government spending has adverse effects on inflation, but it has strong undesirable living and social effects, and it is better for countries to work on rationalizing spending and reforming money management."
He pointed out that “reducing government investment spending helps fight inflation in the short term, but it has significant damage to economic growth and to expanding the economy’s capacity and reducing dependence on oil in the long run.” Therefore, it is not recommended.
He explained that "raising interest rates, despite the importance of these policies to curb price hikes, has a negative impact on economic growth and the recovery of economies. Therefore, policy makers are required to follow policies that do not eliminate the negative impact, but rather reduce it to the least possible.”
In the fourteenth and final measure, Al-Massoumi stressed “to support small and medium enterprises, especially in rural areas, as a result of the financial abundance resulting from the increase in oil prices.”
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