By Prof Augustus Nuwagaba
I would like to put it to Ugandans that the current inflation we are experiencing is a GLOBAL PHENOMENON. It is largely IMPORTED INFLATION, caused by three factors namely: 1. Disruption in supply chains of oil products, leading to rise in prices of fuel (petrol, diesel) and gas; 2. The Russian-Ukraine conflict was unleashed on February 24 2022 to date; 3. Climate change results in drought and crop failure, hence driving HEADLINE INFLATION.
The net effect of these three factors has been the soaring prices of goods and services. Some people may argue that government should provide SUBSIDIES, particularly to oil products. This is not good ECONOMIC MANAGEMENT. It may sound popular, but this is not the time for courting POPULISM.
UK recently MADE THE GREATEST MISTAKE of mixing politics in FISCAL METRICS and the results have been CATASTROPHIC. There is no way the government can SUBSIDISE ENERGY COSTS, SIMULTANEOUSLY WITH HUGE TAX CUTS, in a situation of high inflationary pressures, bordering on a RECESSION. The British Chancellor of EXCHEQUER was fired because of this mistake after markets roiled and the British Pound nose-dived to a level not seen in 100 years. ECONOMISTS, PLEASE BE CAREFUL NOT TO POLITICISE PRUDENT ECONOMIC MANAGEMENT.
Prof Augustus Nuwagaba is an International Consultant On Economic Transformation. This was a brief opinion in a Twitter thread
It should be remembered that President Museveni has previously told Ugandans to eat cassava if they cannot afford bread, making some annoyed with his statement amidst hard economic times. (Read Story Here).