Inflation is presently running at an annual rate of 18 percent but the next national budget will be based on an annual rate of 5-7 percent, Emmanuel Sharon, Director of the Finance Ministry, said Monday.
He said the lower rate would be adopted because the present rate, described as “medium,” is not expected to continue. He said in the past, inflation tended to feed on itself if measures were not taken to curb it. The Treasury therefore will propose a lower budget, despite the balance of payments deficit.
The government will also reduce price subsidies. Sharon said. It has just raised the price of flour by 14 percent and of buns and specialized bread by 12 percent, reflecting the higher cost of those items. Regular bread was not affected. But given the higher price of flour, it will have to be subsidized.
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