Authorities in Algeria are instituting price controls in an effort to calm popular anger about the rising cost of living.
As the rising cost of basic food staples eats into the pockets of Algerians, the government is taking steps to ease the public rage.
"The first stage would be to issue an executive decree that would put a ceiling on oil prices at 600 dinars for 5 litres, and 90 dinars per kilogram of sugar," Trade Minister Mustapha Benbada said.
In a statement released on Wednesday (January 26th), the minister added that his department was in the process of developing a legal framework to control the rising cost of basic commodities. The proposed measures would enable the government to dictate the prices of some consumer goods.
The move comes as authorities try to head off more protests over the rising cost of living. In early January, four days of widespread unrest swept Algeria as citizens protested the country's economic and political situation. The protests eventually subsidised after the cabinet agreed to reduce tariffs on sugar and other products.
The proposed new regulatory powers include the authority to determine profit margins for traders as well as compensation for merchants in case their costs exceed the set price for goods.
Benbada said that this procedure fell within the application of the laws on competition and trade practices that were issued in 2008, pointing to the possibility that authorities could institute price ceilings in case of a "political decision".
Prices of sugar and oil rose 23% in January, as compared to last December, according to the commerce ministry. The government held some local producers responsible for the rise, labelling it "non-natural and artificial".
"The government decided to expand the system of price controls to include agricultural products as well as potatoes, through the identification of surplus products and facing the potential scarcity of products and managing it before it turns into a crisis," Agriculture Minister Rachid Benaissa said during an El Moujahid forum on Wednesday.
Benaissa added, "The state will intervene whenever there is market instability through the storage and control and taking procedures in advance to maintain the incomes of farmers and price stability."
Algerian authorities need to "alleviate social tension" by taking urgent action to establish a ceiling on prices for products consumed by a large number of people, according to Abdoudjerra Soltani, head of the Movement of the Islamic Society for Peace.
Labour Party Secretary-General Louiza Hanoune concurred, saying it was unreasonable for consumer prices to rise whenever there was an increase in salaries. Hanoune called on the government in early January to take further action to protect consumers and promote local products.
Authorities need to organise and determine a profit margin "for all materials with large consumption", according to Saleh Souileh, head of the General Union of Algerian Traders.
Algeria should "create competitiveness in the distribution of basic materials and to prevent the monopoly of the market by the lobbies", an International Monetary Fund report said. The January 26th report said a sudden escalation in prices could lead to protests.
The new government measures "are intended to absorb the anger that exploded after the high prices of some consumer goods", economic expert Salim Abderahmane said, adding that the government "wants to buy social tranquillity and at great costs rather than focusing on promoting the local production and the recovery of agriculture to reduce the volume of imports".
He added that the solutions adopted by the government were "circumstantial and cannot be permanent solutions", saying that "the economic and social policies implemented by the Algerian authorities in recent years have proven their failure, which requires radical change, or at least reviewing a large part of them to liberate initiatives, and focusing on the development of jobs and reviving the productive sectors".
© Magharebia.com 2011
