Govts must learn to tackle inflation

Govts must learn to tackle inflation

17-06-2008:
by Yong Min Wei

KUALA LUMPUR: Governments need to re-tool and re-educate themselves to tackle inflation, said a former premier.

Former Pakistan prime minister Shaukat Aziz said that monetary policies, fiscal incentives as well as effective supply systems were equally important for a government to strengthen when inflation threatens to derail economic growth.

Furthermore, in the globalised economy of today, he said, governments had to be liberal and proactive to face challenges.

“You need a strong leadership at the top that dares to take risks and pre-empt problems,’’ he said at the World Economic Forum yesterday.

For example, Shaukat said, a government had to be in touch with the markets and have a strong bureaucracy that supports change to cushion high commodity prices which would affect the populace hardest.

“As a policy maker, you need to change your thinking as the environment changes, because what was good six months ago might not be good now,” Shaukat, who was premier from 2004 to 2007, said.

He noted that food, water and energy security were key areas that governments should pay attention to, irrespective of whether they were a developed or developing nation.

He said that government, the leadership, and civil society must develop tolerance for mistakes. Furthermore, there must be openness when those in authority communicate to the people about a wrong decision that was made.

In view of today’s high oil prices, Shaukat said, subsidies on essential items should not be given to everyone but those living below the poverty line.