”When it comes to inflation, one important question arises: can inflation be controlled, that is, can fight it? Fighting inflation is very expensive. There is evidence that the United States (U.S.)in the ‘80s, when it faced the revolution in Iran and the second oil shock of ’89 had inflation of 15% and an official position that it should not fight against that inflation because every percentage of falling inflation meant sacrificing 4% of the growth of national income,” explained Domazet.
He believes that the solution for Bosnia and Herzegovina (BiH)is to support the social stratums that are particularly affected by inflation.
“I suggested that people who are in the zone of absolute poverty be paid some allowances that will not be taxed as one-time interventions. There is also the possibility that the state taxes will be frozen at a certain level and that they are not correlated with the growth of prices, because now the state is profiting. As prices rise, so does VAT, and practically the only one that is automatically insured to have income is the state, “ Domazet stressed.
According to him, prices will continue to rise until the end of the year.
Of course, it is possible that the prices will remain at this level until the middle of the year or grow slightly, and that they will start to fall off in the middle of the year so that by the end of the year inflation will be reduced to two to three percent, but no one can guarantee these estimates, ” stated Domazet.
E.Dz.
Source: Federalna
