… Unprecedented fuel price rise will further spur inflation adversely impacting economy
As fuel prices went over the roof in the country – setting a record-high, People’s Democratic Party (PDP) is urging the government to institute a fuel price stabilisation measure through a press release.
Costing Nu 10 and NU 17 a litre for petrol and diesel respectively, Nu 86.28 a litre of petrol and Nu 82.93 a litre for diesel in Thimphu – this the press release states have caused panic amongst the general population.
This unprecedented fuel price rise will further spur inflation adversely impacting the economy, the press release said. “The lower-income people are the most at risk of being hurt by the fuel price rise,” states the release.
PDP release brought to attention that rise in fuel price will impact the transportation sector and consequently inflation will spiral in terms of goods and services and it will affect the livelihood of lower-income section.
With COVID relaxations that has triggered the economy to see a small light of recovery, the release say that the rise in fuel price will impede any recovery effort of the government.
Additionally, the release say the rise in fuel price will make meeting ends harder for the lower-income section by exacerbating the distressful high cost of food.
To this, PDP makes few recommendations for the government to immediately pace out the rise in fuel price.
The release say, the government should activate the stabilisation fund. According to the party, the Bhutan Economic stabilisation fund was instituted in 2017 with the objective to ensure macroeconomic stability with a capital injection of Nu 100 million. The amount which would have been increased is a fund source the government should explore to further mitigate the price rise. The stabilisation fund is to ensure a steady level of government revenue in the face of major commodity price fluctuations. Out of the 15 percent of the earnings of the Hydro Projects paid as annual royalty to the government, 5 percent goes into the Stabilisation fund.
For instance, MHPA alone pays an annual royalty of about Nu 1.6 billion which is at the disposal of the government out of which 5 percent is directly deposited into the stabilisation fund. The release say, this is a significant source of funds that should be utilised to mitigate the adverse impact of the rise in fuel prices.
On the note of recommendation, PDP urges the government to institute a fuel price stabilisation measure immediately. According to the release, the measure should incorporate waiving of the 5 percent green tax, the 5 percent sales tax and surcharges levied presently. This should bring down the fuel cost significantly.
However, the party says that the government must ensure that the benefits of tax waivers are cascaded down to the general public, and strengthen vigilance to strictly monitor unhealthy inflationary practices in the shops and transport sectors.
With implementing the measure, PDP recommends the government to review the impact of the fuel price stabilisation measure after a month and incorporate modifications as warranted by the changing circumstances.