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Oil price would jeopardize government’s inflation target

Oil price would jeopardize government's inflation target

The fuel subsidy is one of the measures proposed by the economists Antonio Ciriaco and Henri Hebrard as part of the mechanisms that the government must use in the face of rising fuel prices in international markets. Petroleum.

The increase in the price of crude oil, which yesterday closed at US$91.32 a barrel for Texas (reference for the country), puts the goal of inflation of the Central Bank and the government, which this year they estimated to be more or less 5%, in the opinion of both experts.

“If this situation continues (the rise in the cost of Petroleum) we may have a inflation double digits this year in the Dominican Republic,” warned Ciriaco, who is deputy dean of the Faculty of Economics at the Autonomous University of Santo Domingo (UASD).

He considered that, although the government has little room to do, it should try to minimize external effects, maintaining the subsidy for hydrocarbons. He argued that the government cannot allow the entire price hike Petroleum is transferred to the cost of fuel because “that has a greater effect on the inflation”.

He added that the oil bill is altering the government’s macroeconomic framework for this year and that it may even affect the country’s economic growth goal if the situation regarding the crude oil market persists.

“This alters the oil bill, at least if the prices remain at today’s level. This would mean that the prices that the government sets in the macroeconomic framework there are already 300 million additional dollars of the oil bill”, he pointed out.

He indicated that, in addition to continuing with the subsidy, the government must encourage supply to the agricultural sector to prevent collateral effects from affecting production costs and encourage the supply of food from large producer markets.

Meanwhile, Hebrard maintained that “on the side of the inflation”, the increase in the price of crude oil “causes a serious problem” for the State.

“There is not much (to do) in the immediate term, what would have to be thought about if the prices correctly, that there will be additional collections, and this money can be used to reinvest it in subsidies highly targeted: LPG (Liquefied Petroleum Gas) Petroleum) for housewives, quintile one and two, and expand the gas bonus”, he recommended.

The economist also suggested an intelligent subsidy for transport users, stating that it is better to help the passenger than the carrier. Similarly, he proposed similar measures for regular diesel, “which is very sensitive for agricultural production and transportation.”

Degree in Social Communication, Journalism mention by the UASD. Since 2012 he has worked in various print media.

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