Mijuskovic: Restrictive economic measures justified in crises

Assistant professor at the Faculty of Economics in Belgrade, Dr. Veljko M. Mijuskovic, stated that capping fuel prices and the prices of basic food products is justified in times of crisis, but not advisable in the long term.

“In times of crisis, when disruptions occur in global supply chains, primarily caused by the crisis related to the supply of oil and petroleum products, as well as issues in the Strait of Hormuz, governments in many countries resort to certain types of restrictive measures in order to protect their national economies, including the Government of Kosovo. These are not any special measures, nor are they different from what has been implemented in the region,” Mijuskovic told Kosovo Online.

He recalled that in Serbia there had been announcements that, if the crisis persists, the government could be in a position to limit exports of certain food products, after exports of oil and petroleum products had already been restricted.

“We have reached a situation where the state has given up a significant portion of excise duties so that fuel remains affordable for citizens at gas stations. Of course, such state interventions should be of a short-term nature. They are not recommended for long-term application, because they significantly disrupt supply and demand relations in the market. However, in crisis conditions, when we are facing a situation like this and when the primary goal is to protect citizens’ interests, such measures are justified,” Mijuskovic said.

He added that if price caps persist in the long term, they could also lead to the emergence of a so-called black market, but stressed that these measures are not expected to last long.

“We see that the situation is turbulent. On the one hand, negotiations on a ceasefire begin, and then tensions in the Strait of Hormuz rise again. It is really very difficult to make forecasts, but in economic terms, we have now had five or six weeks of fairly intense developments. I believe that some economic logic will prevail, leading to a calming of tensions and consequently to a resolution of the problem. Therefore, all these measures being adopted should in some way prevent a blow to citizens’ budgets and, in that sense, should not have negative consequences. For now, of course, they will entail certain losses in the budget, but on the other hand they will protect citizens’ living standards and livelihood,” Mijuskovic said.