Oil price hike, Hoti: The margin of profit is not adequate policy.

In the inflation economy of up to 2% considered moderate, Kosovo has already entered the relatively high inflation phase, influenced only by international conflicts, even by electricity growth trends.

Recently the war in Iran has moved concerns about a new wave of inflation influenced by rising oil fuel prices, Kosovo as a commercial deficit economy is less vulnerable to imported inflation.

But the government has several mechanisms available in the best option to reduce inflation to a moderate point or in the worst option to prevent Gallopant inflation

On this issue, Avdullah Hoti, deputy of the Democratic League of Kosovo (LDK), who served as Kosovo prime minister and finance minister earlier, has told Gazette Express that the price of derivatives spreads throughout the economy.

That is because of what Hoti says the major integration of global markets.

The price of derivatives undoubtedly spreads throughout the economy, increasing the costs of producing and operating businesses. Furthermore, the increase in these costs is carried on consumer prices and other intermediate products. Because of the great integration of global markets, experience has shown that the chain effects are too fast. We've seen this happen before, and we're seeing it now. Kosovo is no exception to this rule”, Hoti has said.

The Kosovo government has not yet taken any anti-inflammatory measures, despite Kosovo having a jurisdiction regulating emergency issues.

The truth is that we share fate with all participants in global markets, as we benefit when developments in global markets are favourable. But in the concrete case of the increase in derivative prices, the entire cost should not be expected to be carried to the consumer. Many European countries have already taken steps to ease the negative impact on consumers”, Hoti has said.

On the other hand, the former Kosovo prime minister has several recommendations which the Kosovo government must undertake based on laws in power. Hoti requires the largest activism of the Market Inspectorate and the Competition Commission.

The market's “Intenspectorate must constantly monitor the market to ascertain how much supply prices are increasing and to what extent this increase is being carried to the price for consumers. Daily report should be prepared on this issue, which becomes transparent to the public”.

The Competition Commission must be fully engaged to ascertain whether there are behavior of supply companies that clash with the principles of competitive market functioning. This is a typical case of the situation in the market where, due to major price fluctuations, the Competition Commission should be committed to official task”.

Hoti has demanded that the government lower the excise that would directly affect the price of derivatives.

The government must immediately intervene to reduce the excise in the derivative. Accysis reduction should be made based on analysis that balances these two factors: (a) how low the excise must be to ensure moderate and moderate price increases for consumers, and (b) what is the impact on budget revenues from the excise cut. The second factor provides more room for the excise reduction government, as budget revenues from VAT to derivatives increase as a result of price hikes. Practically, the government can lower the price of derivatives for consumers to the level when the excise falls to zero, while budget revenues may remain unchanged due to increased VAT value”, Hoti said.

He has also criticised the question of how the margin of profit is being determined, saying he does not protect the consumer from rising prices.

“The size of the profit margins is not adequate for two reasons. First, setting up business margins does not protect consumers from rising prices. This measure only limits firms ' profit by keeping it within a certain limit. Meanwhile, the price increase in international markets is fully carried to the consumer. Second, the assignment of the margin represents intervention in the business operating model, which is guaranteed with the Constitutions as freedom of business action. History has proven that the intervention of the state in such business matters only makes the situation worse by getting companies out of the market, which results in worsening competition”.

The state has to provide competitive conditions and prevent the behavior of companies that clash with free market economy. Beyond that, to achieve the desired effect, the state must use fiscal and industrial policy instruments. In the concrete case, the desired effect is prevention or a moderate increase in the price of derivatives. And this can be easily achieved by operating on a reduction of”, Hoti said.