BY JOHN HOUANIHAU
Central Bank of Solomon Islands (CBSI) Governor Dr Luke Forau has discouraged buying fuel out of panic in light of the ongoing crises in the Middle East.
He told media this after the Public Symposium on “From the Middle East to the Pacific: Understanding the Global Oil Shock and Its Economic Implications” at Kukum Lecture Theatre on Wednesday.
Mr Forau said that engaging in the panic buying mode will only fasten the crisis even for the country itself.
“We should not go into that panic buying mode. Although it’s uncertain, we just buy how much is enough for us to consume and let the economy function. Because if you do that, you will just expedite it. The economy will be affected because people will store the fuel for their own use” he said.
He adds that this will lead to jeopardising others who need fuel.
“It’s not helping anyone. At the end our economy would not function. So, it’s better that we just buy what is needed for us to consume. And then we continue the process,” Forau said.
He said that the country would not feel the impact until May and beyond.
“Fuel should be paid with our normal price. If sited increase of price somewhere, meaning it is illegal and should be reported to the authorities,” he said.
Forau said that the key mandate of CBSI is to ensure or maintain the price stability, in particular, inflation, ensuring that inflation is maintained or contained at a sustainable level.
“Increase of fuel price will definitely increase price of goods. That will cause inflation to increase. Now, our mandate is to contain inflation,” he said.
He said that it is a supply-driven or cost-push.
“The CBSI can only be able to influence a demand-driven inflation. In other words, the monetary policy tools that we have at the moment are very blunt to even absorb the supply-driven inflation. What we do is we collaborate with the government because only the fiscal policy can be able to address the supply-side-driven inflation.
“With those actions where the government will be able to address, hopefully in the next few days, that should be able to address the inflation. At least cushioning, definitely it will increase, but we need to reduce the impact,” Forau said.
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