By Ritah Kemigisa
Economists are advising that government as alternative directly gives money to the people if they are to cope with the high cost of living.
This comes at a time the president offered no hope to Ugandans as he addressed the nation on Sunday night as he ruled out subsidies and tax cuts on essential goods.
The United Nations Chief Antonio Guterres has however renewed calls to governments to shift subsidies away from fossil fuels to protect the poor and most vulnerable people.
However speaking to KFM, Dr Fred Muhumuza, a development economist and lecturer at Makerere University says subsidies will only favor the rich while the poor will continue to suffer more as they do not guarantee a fall in prices.
“Uganda is an open small economy in a global setting, we are at a level where inflation that is being driven by global forces, we have to just be price takers, you can lie to yourself and say you will moderate my people, lets remove taxes from fuel but then how do fund the budget that is already constrained, how will you maintain the subsidy?” said Dr Muhumuza.
According to Dr Muhumuza, “in the economics of subsides, price increases hurt the poor most, when you subsidize on fuel, it will not trickle down to the poor, even when a bus receives fuel at a lower price, don’t expect passengers to pay less. The subsidies will be absorbed by those who receive them immediately and will never pass them on.”
It is from this that he recommends a direct injection into the economy.
“If we had money, you would recommend for another round of Nabbanja’s shs 100,000, send it directly to the poor people. This would be the time to say let’s find some shs 20 billion and send it directly to the people because we can’t lower the prices of soap but I have sent you money to buy that soap so basically you increase their flexibility,” said Dr Muhumuza.
