Bad example

It is common practice for government officials to issue appeals to the public or even to intervene directly in the marketplace in order to limit exaggerated price increases. Their standard, and reasonable, argument is that such price rises also fuel inflation. In effect, this starts a vicious circle which, apart from reducing the buying power of wage earners, also tends to destabilize the overall economy. In this context it is inconsistent, to say the least, for the government to trigger price rises through its own actions. September’s inflation was at 3.9 percent, considerably higher than it should have been in order to keep the average within budgeted limits. The main causes are rising oil prices, along with increases in electricity and water bills and municipal rates. There is no doubt that once the public utilities are listed on the stock market and operate according to the market-based criteria, their prices will no longer remain at unprofitable levels but will rise. On the other hand, it is unacceptable for them to adopt the easy solution of increased rates when it is well known that they could do much more to explore all avenues for reducing the costs of the services they provide to the public. Waste and unreasonable expenditures are still the rule – even more so in most municipalities. Raising municipal rates is another easy way out, given that the public has no alternative but to pay up. When municipalities and some utilities set a bad example, it is certain that companies in the private sector will soon follow suit, boosting inflationary pressures still further. And, clearly, the Development Ministry will not have the moral and political grounds to exert pressure on businesses to exercise self-control in the matter of pricing policy. In these cases, it is unlikely that the solution will be initiated by those who administer the utilities themselves. Their viewpoint is necessarily restricted and they are always tempted to exploit what is usually a market monopoly in order to increase revenues. It is the government itself and, more specifically, the Economy and Finance Ministry that must exercise control and prevent a trend toward non-essential increases. And it must bring pressure to bear with drastic measures aimed at modernizing services and curbing unnecessary expenditures.