Scholar Stresses Need for Economic Intervention to Curb Inflation, Other Challenges

A prominent economist recommended today introduction of pegged exchange rate and fixing of prices of basic goods to overcome post-war inflation and other immediate economic challenges.

A fixed exchange rate, often called a pegged exchange rate, is a type of exchange rate regime in which a currency's value is fixed or pegged by a monetary authority against the value of another currency.

Presenting his paper that focused on post-war economic challenges in Ethiopia and the way forward, Professor Alemayehu Geda of Addis Ababa University said fixing prices of basic goods is a critical means in curbing post-war inflation and other economic deficiencies that have been used by various countries across the world.

Along fixing prices of basic goods, however, there is need for working on supplies at the same time, he added. Working on supply and price fixing simultaneously is critical to bounce back from post-war economic challenges.

For him, the public owned Kenema Pharmacy and Etfruit are the two best examples which have been experienced in Ethiopia for years with fixed price.  

The professor  further noted that expanding such structure is critical in post-war situation. In post World War-II, the price fixing structure was used in USA, China, and U.K, among others; and all have proved effective.

Issuing post-war reconstruction bonds is also another tool to fix the inflation because financing in old and familiar ways would lead to further inflation, he noted.  

According to the economist, this could be applied in small denomination bonds sale for the diaspora and providing equity in various sectors in return.

Highlighting that import substitution should be a priority in the long-term, Professor Alemayehu stressed that the policy and incentives should be given due attention to stimulate the import substation in various sectors.

The manufacturing sector which creates a great deal of jobs for citizens and as key factor in transforming the nation’s economic sector has also immense potential to be flourished in Ethiopia.   

He stressed that the country needs well qualified human power and suitable policy to realize all the stated ambitions in the economic sector and the nation's  inclusive growth.