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Sunday, 23 October 2016

Government mulls price caps if private sector doesn’t fall in line

GOVERNMENT EXPLORING PRICE CAPS on basic commodities. Prime Minister Sherif Ismail ordered a committee be formed to set mandatory maximum profit margins on the sale of basic commodities. The committee was created at a closed-door meeting on 9 October. The decision to cap margins on commodities is “ready for implementation if the private sector does not respond to calls to control prices,” unnamed government sources told Al Shorouk. This not-so-veiled threat appears to belie assurances by Ismail last week that the government was not going to set prices for the goods, the newspaper reported. Cabinet spokesperson Hossam Qawish had alluded to the caps in a call-in to Lamees El Hadidy’s Hona El Assema last week.

Naturally, the private sector is in an uproar, with members of the Federation of Egyptian Industries (FEI). including board member Ahmed Mashhour and Juhayna Chairman Safwan Thabet, calling it at best a rejection of free market principles and, at worst, illegal. Importers and manufacturers alike are growling about the return of 1960s economic policies, Al Mal says, and the FEI is set to hold a meeting today to discuss the situation.

Traders claim they welcome the move, saying this way they can’t be blamed for spiraling prices amid a government crackdown on price gouging that was the subject of a sit-own between President Abdel Fattah El Sisi and Central Bank Governor Tarek Amer. The two were joined by the ministers of finance, supply, defense, the interior and foreign affairs, El Watan reports. Amer’s presence at the meeting suggests that the move to curb inflation is being considered along with a possible devaluation. The group also discussed ramping up security in the wake of the assassination of a senior army commander yesterday.

Naguib Sawiris took the time to pen a scathing op-ed on the move, calling it proof the government fails to understand either economics or the free market. He starts off by giving a lesson on supply and demand and how the subsidies system is the real culprit in the nation’s present economic state. The government, he said, is sending mixed signals, proclaiming to be a proponent of free markets, then wanting to police it.

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