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The Coalition for Unity and Democracy Party (CUDP)
called on the government to intervene in the market
to curb inflation. The seven points of which CUDP
made public on August 30, 2007, include subsidies
and suggestions for further studies.
In its press conference at Ras Hotel along Gambia
Street, CUDP expressed doubt about the government’s
knowledge of inflation’s causes.
“Government does not have sufficient information on
how the general price level overwhelms the standard
level of the purchasing power of the consumers,” one
of the seven points of CUDP indicates.
The policy prescriptions included forming a
committee composed of members of the public and
experts in the field of economics, as well as
balancing market intervention and free market
operations.
The statement also advocated the formation of
merchandisers association with the aid of kebelle
officers such that they directly buy the commodity
from individual farmers or farmers’ unions to supply
consumers.
CUDP advised that since one of the leading factors
that caused the inflation is the increase in fuel
and food prices, government should subsidise fuel
market and institute food for work programmes.
The inflation has especially been felt in basic food
commodities such as red pepper, edible oil and
teff.
So far, however, many domestic and international
entities disagree on both the causes and solutions
for rising prices.
According to the EPRDF, the inflation is the
by-product of growth and economic transition such
that the long term solution is to accelerate the
growth of the economy. However, in short run, the
government believes in subsidising consumer goods.
On the other hand, opposition groups, particularly
those from CUDP as well as the Ethiopian Unity
Democratic Party EUDP-Medhin, dispute government
policies related to inflation but cite a lack of
capacity to undertake their own studies and thus
push alternative agendas.
The two opposition parties’ rift lies in CUDP’s
encourages subsidies while, EUDP-Medhin insists on
increasing the salaries of the civil servants. Both
prescriptions, however, advocated market
interventions conflicting with liberal economic
stances advocated in the past.
Speaking to Fortune, Berket Simon, public
relations advisor of the Prime Minister with a
ministerial portfolio, dismissed the seven point
initiation of CUDP as baseless.
“Though the formation of a committee does not
address the problem, forming consumer associations
could be helpful,” said Bereket. “However, we can
not chain individual farmers and their association
into selling their products to the associations
only, as this would contradict market forces.”
Bereket further described the difference between his
party and the opposition by claiming that the
government is taking action while opposition
recommendations are scattered.
“These recommendations represent a departure from
past ideologies and incoherence,” Berket said.
The Temsgen Zewdie-CUDP initiated this press
conference a month ago after he held discussion with
the released CUD leaders, and found it necessary to
depart form party lines.
“Although CUDP’ does not nromally favour the
intervention of state in the market, however, the
emergency situation dictates a more proactive,”
Temesgen told Fortune.
However much the government campaigns to convince
the general public of the dropping inflation rate
from 19.1pc to 16.7pc, the residents of Addis Abeba
are not convinced. Almaz Bireda, resident of Arada
District, Kebele 15/16 refused to buy this idea as
50kg of teff has increased from 200 Br to 260
Br, while a litre of edible oil has increased from
13 Br to 25 Br.
“I am seriously in trouble,” Almaz cried out.
Inflation is felt all over the country, however, the
solution to stabilise the consumer price hike
presented by both parties lack proper research, one
expert told Fortune.
“Subsidising lower income groups now could be
beneficial so long as it addresses the problem of
the actual people affected by the inflation,” said
the expert. “The fact that EPRDF and CUDP started to
share common grounds in relation to the inflationary
situation is a good sign.”
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