PRICE CONTROL: A BIG FARCE?

It appears that both ministers - trade and onsumer protection - are fighting obviously a losing battle by trying to control and contain prices of imported essential food items such as milk powder, sugar, flour, etc. amidst a epreciating rupee and increased cost insurance and freight (CIF). This unexpected and challenging situation is mainly due to our US dollar crisis and Covid pandemic that have adversely affected the supply chains world over with inevitable price fluctuations - mostly going up.

In this scenario, it is nothing but a futile attempt by the concern ministers, specially one being a self-claimed authority sort on economics, trying to sustain food prices with price controls. These attempts are only political gimmicks that invariably would come a cropper as in the past.

Let alone price control on imported food items, even the locally produced rice, the staple diet of all Sri Lankans, is beyond the reach of many. Thanks to our so-called expert Ministers! The record number of gazette notifications issued by the relevant ministers is cases in point for price control failures on rice, sugar, milk powder etc. which have only added insult to injury on the suffering and helpless masses.

These endless notifications on regulated prices, practiced mostly in the breach by the traders have only devalued and desecrated the status of the gazette! In the mean time prices are soaring at will, while the ministers in charge seeing the futility of their actions take cover behind often repeated scapegoat of their ‘MAFIA’!

Furthermore, the Central Bank experiencing the worst ever foreign exchange crisis, now insist on advance payment to cover the value on letters of credit to allow most importers to get down many categories of products which are normally imported by them on either 120 or 180 days credit. As such, unlike before where you import, sell and settle bills, now it is settle, import and sell!! Put shortly, no small or medium scale importer could survive such ad hoc arrangements. End result would be more shortages and black marketing.

On the one hand, the government is in a catch 22 situation being unable to reduce import duties any further due to its dwindling coffers in local revenue. On the other hand , it is forced to curb imports to save foreign exchange in the wake of massive debt servicing, as never before.

In this background, it seems that the govt. as only two options as of now. A bailout either from the International Monetary Fund (IMF) or China’s EXIM Bank. The latter would be preferred, come what may, as IMF imposed conditions on loans are no doubt an anathema to our politicians who feel that their own progress and prosperity would be at stake!!