Fahed Fanek

It seems that our government does not trust its Department of Statistics, which indicated that consumer prices remained stable during the first eight months of this year and that the cost of living index rose during the first eight months of this year by less than one percentage point over the level registered at the end of 2006.

On the contrary, the government preferred to believe the journalistic noise complaining that prices went over the roof and made the life of limited-income groups all but impossible, a false claim that they did not prove in any way.

It also seems that the achievements of economic reform, the liberalisation of the market, dependence on competition, and supply and demand factors, the opening up of the market to unrestricted flows of imports and exports, reforms which were achieved the hard way, do not yet enjoy the trust of the government or of the people.

Authorities look ready to write off and sacrifice all the results of reform, which took Jordan 18 years to accomplish, which enabled the country to attract investments and allowed economic growth to exceed the 6 per cent target.

If the government is serious in its attempt to interfere in the market to suppress prices, the only method allowed under our present free economic system is to employ positive and negative incentives through its management of the macro-economy, i.e., by using a monetary policy imposed by the Central Bank and the fiscal policy of the Ministry of Finance, to create the environment needed to protect the dinar’s purchasing power and prevent prices from rising beyond reason.

Under no circumstance should the government go back to play, and fail, the role of a trader or an intermediate.

The Ministry of Supply, a costly mistake, was born under the impact of rising prices of sugar. We needed 25 years to abolish the blunder, along with the monopoly, incompetence and waste that went with it, bordering on corruption.

The ministry played the role of a middleman between major importers and agents of basic commodities and the domestic market, thus ridding them - the importers - of the burden of storage, distribution, debt collection and bad debts. The Ministry of Supply cost the Treasury tens of millions of dinars every year to cover losses and mismanagement.

We definitely don’t want to see it resurrected in any form.

The idea of setting up makeshift markets to sell vegetables and fruit directly from the producers to the consumers looks nice on paper, but the real meaning is that civil servants will act as the intermediates between producers located in the Jordan Valley area and the consumers in the cities and towns. Government officials are, of course, more costly and less efficient than the brokers who work during nights and very early mornings, which in no way suits the government bureaucrats.

Admittedly, one can point out some isolated examples of certain commodities’ rising prices for obvious and legitimate reasons, such as milk, eggs and meat. However, the overall cost of living cannot be based on the prices of one or few commodities.

The Department of Statistics calculates the index based on following up prices of some 800 items forming the average family budget from one month to another. There are, of course, many items in that budget whose prices remained constant this year, such as rent, water, electricity, fuel, bread, government school fees, transportation, etc.

If prices made a jump this week, the reason will not be inflation, which is under control, but the big noise made by the press and the hasty measures taken by the government. They are self-fulfilling predictions.