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Oil prices rise for second time in Ethiopia, why?

Presenting this article on Facebook is a challenge by any measure. Silence is wrong, so I have to say it briefly.

In less than a month, oil prices have doubled for the second time. The reason for the increase is that the government has to stop subsidizing fuel. It is unknown at this time what he will do after leaving the post. why ?

Inflation and inflation are not the end of the world. This month alone, inflation is the second highest inflation rate in Ethiopia’s history. Over the past three years, all government services, including the renewal of IDs, including electricity, water, rent and donations, have increased by 100% to 300%.

On the contrary, the income of a large number of civil servants, retirees, etc. has not changed significantly over the years. In addition, since oil has a huge impact on all sectors, from production to production, it is clear that inflation and inflation will be doubled. This is challenging our very existence. Bread and enjera have increased by more than 30 percent aside meat.

Unpaid wages, retirees, and low-wage workers are subject to both high inflation and declining purchasing power due to year-over-year inflation. In turn, there is a risk that they will not be able to afford to buy anything other than their daily needs.

It is clear that if our economy continues to be fragmented in this way, the capacity of citizens will gradually diminish and they will not be able to meet their daily needs. Lack of interest means the total growth and investment of the country as a whole. In the end, it is the government, who makes both the poor and reach equally poor.

In general, in supply-intensive countries, wage increases cannot improve purchasing power unless supply increases demand and increases prices. On the other hand, subsidies do not solve basic problems other than short term solutions. Subsidies do not solve the problem by increasing demand and overcrowding and mass subsidies not only for the incapacitated but also for the infirm. This reduces government spending, undermines development, and hinders growth.

What is better? That is the challenge.

Most poor countries subsidize oil, so subsidy is not a special challenge for them. Wealthy nations, on the other hand, are better able to afford their own goods and services by lowering tariffs on fuel and preventing waste and air pollution.

In general, if wage increases cannot improve living conditions or increase supply in the short term, it is imperative to choose the best of the two bad ones by supplementing basic supplies instead of raising wages. The solution is good, especially if the country leaves the party and starts saving.

Together with denial of subsidies and wage growth is to live without eating the food of a low-income worker who is suffering from inflation and inflation. This will inevitably lead to social unrest and then instability.

Written by Editor


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