Skopje, 29 March 2023 (MIA) – Capping prices is not a market measure, and if the government wants to intervene in order to protect the population, it should activate the state reserves which always prove to be the better mechanism in these situations, said the Executive Director of the Economic Chamber of North Macedonia, Antoni Peshev in answer to a journalist’s question on Wednesday ahead of the Macedonian-Austrian business meetings in the Chamber.

According to Peshev, the other economies in the world have a different approach and aren’t tackling this issue with price caps. It is better, he said, to subsidize a portion of the population that really needs it, but to also help by directly reducing the customs duties, assisting in the import of raw materials, subsidizing electricity and other mechanisms that will make domestic production more competitive.

 “The government reached for this measure wanting to reduce the pressure on the population, but I believe that all economies in the world are approaching this issue a little differently. We are in favor of a principle that doesn’t cap prices, but instead subsidizes the population that really needs it. Capping prices needlessly places businesses in an unfavorable economic position, and the products are sold to those groups of the population to whom that difference in price means nothing. Which is why, we have much more respect for the government measures that are a direct intervention in reducing customs duties, assisting in the import of raw materials, subsidizing electricity and mechanisms that will make the domestic production more competitive, as opposed to directly capping prices,” said Peshev.

Capping prices, he stressed, is a measure that can’t last long, and one that will be followed by rising prices again after it stops being valid.

 “This measure can’t last long and after it ends we will again face the issue of rising prices. In the meantime, companies whose products were affected by the price caps have lost a lot of money, which is why we are always in favor of market measures, as opposed to populist measures,” said the Chamber’s Executive Director.

When asked if they have conveyed this to the government, Peshev answered affirmatively.

 “Yes, absolutely, we came out with a few statements, but the government has a right to cap the prices. However, we will reiterate once again, there are mechanisms that are underused, and those are the state reserves, which always prove to be the better mechanism in these situations compared to the price caps. The government should, if it wants to intervene, boost the influence of the market by entering the ‘pool’ of the state reserves,” underlined Peshev.

There are no price caps or limits in Austria. Only price caps on real estate and rent were discussed, with the conclusion being that it would be better to directly assist the citizens with funds that would help them cover these expenses.

According to Richard Bandera, Regional Director for Southeast and East Europe and Central Asia at the Austrian Economic Chamber, the second key topic in Austria are the energy costs.

“We have introduced support for households in order to help them cover their energy expenses. We are talking about a couple hundred euros which is not a lot, but it still is a step forward in supporting the citizens. We have also provided assistance to businesses that have an intensive consumption of energy,” said Bandera.

The Macedonian Chamber of Commerce also expressed its opposition to the price caps on Tuesday, qualifying it as a non-market measure.

 “Each capping of prices has positive and negative consequences. On September 8, 1991, the citizens of North Macedonia voted for independence, for a free economy, for a free market. The free market is a characteristic and a benefit of that independence and we generally prefer a free economic market, but the government has its own sphere of action and if they think that this is right, then they should explain the idea, the goals, if this is temporary and how long it would last,” said the President of the Chamber of Commerce, Trajan Angeloski. ad/nn/