Electricity will shock the state too, not just citizens
A LEADING economist is calling for improved management of TRNC government finances in a bid to control the national economy and slow or prevent the rocketing cost of living.
Göksel Saydam has suggested that the Price Stabilisation Fund (FIF) should be used to subsidise the cost of fuel oil, which would in turn lead to reduced electricity and bottled gas prices for the consumer. He explained that the fund provides subsidies to oil importing companies already at present, but emphasised that “the important thing is to use it properly, not only for electricity and bottled gas but also for other basic consumer goods”. He went on to say that “lower prices should be passed on to the distributors as a result of the subsidy support of import companies”.
According to Mr Saydam, not only the people but the state also stands to gain if electricity prices are kept low, as the state will have to spend less money in order to help those who receive government support. He also mentioned that the money accumulated in the fund is currently often diverted to different areas of the economy, while it should be used for subsidies. He noted that the taxes levied on luxury goods can be increased in order to amass money in this fund.
Pointing out that the pandemic has changed our living habits, Saydam said: “unemployment has increased in the country and spending patterns have also changed. Because of this, the State Planning Organisation needs to conduct a scientific study. Weekly reports should be prepared and consumption patterns should be examined”. He pointed out how the country’s cost of living is calculated based on the price of an ordinary person’s supermarket “shopping basket”, but said that “unfortunately, the basket prepared in 2015 is still used in determining the cost of living in our country”, despite it evidently being out of date.
Mr Saydam also called for a study to be carried out on electricity tariffs that are set according to the type of consumer, saying that the economy and tourism sectors are the “engine room” of North Cyprus’s economy. He noted, however, that the country’s high energy prices are offputting for some foreign students, saying that “when students see the country’s high electricity prices, they decide not to come here because they say that they can study cheaper in Turkey”, and adding that there is “work to do” in order to improve this situation.
Speaking of the rate of inflation, Mr Saydam expressed that it is inconceivable that the TRNC has a lower inflation rate than Turkey and said that many products come to the country from Turkey. He stated that when customs and other taxes are added to the price of these products, the prices are more expensive than in Turkey and asked, “how can the January inflation rate be 11.10 in Turkey while it is 5.48 in our country?”
The Public Finance Management and Oversight Law came into effect in 2019, which, according to Mr Saydam, aims to “ensure financial and economic stability, to obtain and use public resources effectively, economically and efficiently, to regulate rules regarding the structure and functioning of public finance, including budgets and financial oversight of all transactions to ensure accountability and transparency”. However, despite three years having passed since the law was passed, Mr Saydam claims it has never been implemented. He says that various excuses have been given, such as the pandemic and staff shortages, but that urgent action is now needed.
Mr Saydam believes that the government could also make money by selling assets. Citing the Sea View Hotel in İskele and the Sea Side Hotel in Gazimağusa as examples, Mr Saydam explained that idle and stateowned facilities can also contribute to the country’s economy. Aside from these, Mr Saydam said that the spaces rented to hotels for 49 years could be sold to them, “at the end of the day, these spaces will be rented to the same people. However, resources can be created by selling them now. They are already run by the same people.”