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Council to discuss ways to check rising inflation

A special FNC committee will meet tomorrow in the presence of financial experts and government and private sector representatives to discuss evolving a unified federal strategy to curb the escalating levels of inflation.

The findings of the committee will then be discussed in a series of FNC sessions in November in the presence of the Minister of Economy and other government representatives.

According to FNC member Khalid bin Zaid Al Falasi, the discussions will revolve around the topics of rising fuel prices, decreasing value of the dollar, rising rents, and the rising prices of commodities and services.

"It is very important to develop a sensory organ that will enable us to anticipate future economic challenges, and address them before they occur. The increase in fuel prices, for instance, could have been anticipated and addressed much sooner," he said.

In addition to discussing ways of controlling fuel prices, the council will be urging the government to regulate the prices of basic commodities and to subsidise these commodities.

The main points to be discussed with regard to inflation coincide with those mentioned in a report by the Department of Planning and Economy (DPE) issued in July 2008.

A major part of inflation, which is currently estimated at around 12 per cent, is caused by haphazard increases in the prices of commodities and services in the local market, states the report.

Although the government has decided to continue its policy of pegging the dirham to the dollar, the President of the Financial, Economic and Industrial Affairs Committee, Hamad Hareth Al Midfa, said even this issue would be open to discussion at the FNC sessions.

"Inflation in the country poses a great challenge for us, especially as we work with the GCC to reach a unified currency by the year 2010. Thus, the issue of the dollar peg will be studied comprehensively by the council," Khalid bin Zaid said.

FNC member Khalifa Abdulla bin Huwaidin said the growth in the real estate sector is another factor that has led to inflation, and said the FNC would urge the government to adopt an alternative developmental vision to cope with the current challenges.

"Instead of continuing with large real estate projects, big companies must be encouraged to turn to the outside to stabilise the situation," he said.

"There were a total of 640,000 employment licences issued during the first four months of 2008. Contractors, builders and investors created a demand for labour, and this excessive influx of people into the country reflects a flawed economic strategy. How can the country cope with this large number of people?" stated Huwaidin.

Huwaidin added that increasing salaries for low-income labourers, although important, is only a partial solution to the problem.

"As members of the FNC, we receive many complaints from nationals who are suffering due to inflation. Some nationals cannot even afford to send their children to college because of the high living expenses," he said.

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