Higher imported Cost of Living demands Competent Governments

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Higher cost of living demands competent governments 

By Sir Ronald Sanders 

(The writer is Antigua and Barbuda’s Ambassador to the United States of America and the Organization of American States.   

He is also a Senior Fellow at the Institute of Commonwealth Studies, University of London and Massey College in the University of Toronto) 

Throughout the world, people and their governments and Central Banks are worrying about inflation, or the rate of increase in the cost of living.

 

In many countries, this concern about the cost of living has become a prime consideration in general elections because electorates want competent governments in whose hands they commit their expectations.

Two questions arise: what is responsible for the cost of living, and can governments in small, developing countries, such as those in the Caribbean, take actions that would address the issue satisfactorily?

In the mid-term elections in the United States of America (U.S.) last month, inflation (roughly translated as ‘the Economy’) was an issue that surfaced in early campaigning, although it waned toward the end.

The main concern in the U.S. was the high cost of oil that followed Russia’s invasion of Ukraine and the consequent efforts in Europe and North America to boycott Russian oil, or at least to minimize dependence on it.

The refusal of the big oil producing countries to increase their output to compensate for shortages created by the isolation of Russia, increased oil prices globally.

 In turn, this caused the Biden administration in the U.S. to release oil supplies from its strategic stock, reducing gasoline and diesel prices.

Because of Biden’s action, by the time the mid-term elections were held, the value of this issue, in political terms, dropped to 38% amongst the electorate.

However, the oil issue persisted in Europe which had developed a dependence on Russian oil and gas.

Europe will barely manage to keep prices down this winter only because European nations will utilize Russian supplies that they had stockpiled prior to the Russian war on Ukraine.

Both for the US and Europe, heating and its attendant costs to consumers will be a problem this winter.

But next year will be worse if the isolation of Russian oil and gas from the world market continues.  Stocks will be depleted if not exhausted, causing prices to soar.

All this could cause serious social unrest in Europe.  There have already been protests in Greece, Belgium, Germany,  France, Spain, Austria and the Czech Republic – the latter of which has seen household energy bills surge tenfold.

The world is also still experiencing the residual impact of the COVID-19 pandemic that severely disrupted supply chains for food, medicines, and commodities for construction and agriculture.

 Costs of construction material increased by as much as 90% since the start of the pandemic.

The Caribbean Community (CARICOM) countries, particularly the six smaller nations that comprise the Organization of Eastern Caribbean States (OECS), have little control over the cost of living being experienced in their respective countries.

As the Governor of the Eastern Caribbean Central Bank (ECCB), Timothy Antoine, put it in July, “We import inflation, principally from the US and also from Europe our major trading partners”.

In the specific case of The Bahamas, largely because of geographic proximity, it conducts 85% of its trade with the U.S., importing almost $3 billion in goods in 2021 and giving the U.S. a balance of trade surplus of $2.5 billion.

  Therefore, the Bahamas is very vulnerable to the impact of inflation in the U.S.

As small states, with limited capacity for the production of goods, Caribbean countries import from the U.S. and Europe, bringing to their shores the high costs in those countries.

 Belize, Guyana and Suriname have some capacity to dull the impact of importing agricultural products because they are less reliant on such imports due to their relatively larger agricultural sectors.

But even these three states still confront both the shortages and high prices for agricultural inputs, such as urea and ammonia.

In a sentence, the current rise in the cost of living is not due to policies of Caribbean governments; it is caused by external factors beyond the control of governments.

To be fair, all Caribbean governments, to one extent or another, have taken steps to cushion the effects of inflation on their populations, especially the poor and vulnerable.

Many governments have introduced measures to subsidise the prices of basic foods.  In the case of Antigua and Barbuda and St Lucia, for instance, the governments subsidise the costs of oil and gas.

 Furthermore, in Antigua and Barbuda, the government has written off arrears owed for electricity, water and property taxes, as further measures to ease the impact of imported inflation  on the population.

A major consequence of these actions is that government revenues are diminishing, and their ability to service the demands of every sector of their society is considerably strained.

As is presently happening in Antigua and Barbuda and in Guyana, Caribbean governments will also have to increase wages and salaries, including the minimum wage, so that the general population can cope with increased prices.

 Overall, this will lead to higher per capita incomes, resulting in disqualification by international financial institutions from access to low-cost borrowing, precisely when Caribbean countries need it most.

In Antigua and Barbuda, the Government and the private sector managed to agree on an increased minimum wage, recognizing that cost of living increases had to be met to maintain social and economic stability.

The big question that remains for the region is: when will the global economic disruption caused by Russia’s invasion of Ukraine and consequent retaliation by the US, Canada and the European Union end?  Right now, it looks set to drag on into next year.

Caribbean countries, therefore, should be working feverishly to implement the many plans, which they have agreed to increase trade in goods and services among themselves; to establish joint ventures for the manufacturing and agricultural production; and for air and sea transportation.

  They also have to enhance the Caribbean Development Bank and consider new ways of investing Caribbean savings and profits by investing them within the region, rather than abroad.

In other words, the Caribbean has to become more self-sufficient and less vulnerable to external factors.

Responses and previous commentaries: www.sirronaldsanders.com 

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4 COMMENTS

  1. Notes From A Native Son Of The Rock! “The Afrocentric paradigm is a revolutionary shift in thinking proposed as a constructural adjustment to black disorientation, dislocation, decenteredness, and lack of agency.” – Dr. Molefi Asante, The Theory of Social Change! This mere voice in the wilderness has for some two decades been been trying to convince People of African Descent resident on the Rock of the imperative to be re-rooted politically. economically, socially,, educationally, historically and spiritually, given that for too long we have been held captive to European Religiosity and White Monopoly Capital! Ever since we were transported in chains across the “Middle Passage” to the Rock, we have existed on the margins of British Imperial Might and Empire and have been victimized by Anglo Saxon illusions that our emancipation, statehood in association and Independence were in our own self interest, so much so that our bamboozlement by “The Firm” and Patricia Scotland to preserve Charles as head of CHOGM was a fait accompli!

    This phenom is and has been replicated throughout the English Speaking Caribbean! Professor Sir Hilary Beckles says that while people have spoken about Barbados as a global symbol of stability, a critical question that must be answered is what part of that stability is consensus and what part is repression. “The Barbados society in its current structure is not sustainable,” The Breton Woods Vultures of the IMF and WB have sunk their talons into “Bimshire!” Just as was done to South Africa under Mandela so have they done to Mottley! Mandela was forced to take out a loan in 1994 just as Mottley was compelled to do on attaining power! Jamaica after six decades of Independence is still a basket case with the albatross of WB and IMF loans resting on its political, economic, social, technological, legal and environmental body!

    “There is, in Barbados, a division of labour which says that the black community will occupy and control the politics and the white elite will control the economy…All of us as citizens of Barbados have to examine this model and transform it. It has to be transformed in order to fulfil the vision if our ancestors in General Bussa’s time, General Greene and Clement Payne,” said Sir Hilary, referring to other freedom fighters!

    As de vendor at da market say: Pay Attention!

  2. Notes From A Native Son Of The Rock! “Imperialism is a system of exploitation that occurs not only in the brutal form of those who come with guns to conquer territory. Imperialism often occurs in more subtle forms, a loan, food aid, blackmail . We are fighting this system that allows a handful of men on Earth to rule all of humanity.” – Capitaine Thomas Isidore Noel Sankara, The Upright Man, Pan-Africanist, Revolutionary and President Burkina Faso, Born 1949 Assassinated 1987!

    “Both for the US and Europe, heating and its attendant costs to consumers will be a problem this winter. //But next year will be worse if the isolation of Russian oil and gas from the world market continues. Stocks will be depleted if not exhausted, causing prices to soar.” – Ronald Sanders, Antigua and Barbuda Ambassador to the US and the OAS! What is here missing is the fact the the EU has de facto relaxed sanctions against Zimbabwe so that they can begin mining and shipping coal from “Zim” to satisfy their energy need! Notwithstanding COP27!

    “As the Governor of the Eastern Caribbean Central Bank (ECCB), Timothy Antoine, put it in July, “We import inflation, principally from the US and also from Europe our major trading partners”.” Ronald Sanders, Antigua and Barbuda Ambassador to the US and the OAS! During Covid 19, White Monopoly Capital went on a spending spree and ran the money printing presses wide open! No Country with People of African Descent at the Political helm has the authority to do the same!

    For those who failed to understand GoAB’s Policy on Banking Acquisition, here’s a little something: “On November 29, the Royal Bank of Canada announced its plans to buy HSBC Bank Canada in an agreement heralded as Canada’s biggest domestic banking deal on record. What does the acquisition mean for HSBC customers? Business as usual — for now. RBC intends to purchase HSBC Canada for $13.5 billion in cash. If approved, the deal will cement RBC’s position as one of the largest banks in Canada. RBC’s total revenue grew to approximately $49.7 billion in 2021, according to Statista. It’s already the largest bank in Canada by market capitalization but trails TD Bank in total assets, according to Statista analysis. The acquisition will end over 40 years of financial services for HSBC Canada. The Canadian arm of the multinational bank boasts 130 branches, 4,200 employees and $134 billion in assets as of September 2022. While it’s agreed to sell its Canadian subsidiary, HSBC will continue its operations in Europe and beyond. Deal expected to close in late 2023, following regulatory approval. Executing a complicated corporate merger takes time, and this deal is no exception. RBC’s acquisition of HSBC Canada isn’t expected to wrap up until late 2023. And that’s if everything goes to plan:”

    “De-risking!” Hab Mercy Pan Arwe! Nuff Said!

  3. Yes, Ron Saunders and who is the competent government to lead
    Antigua an Barbuda in times inflation and high cost of living? Is the answer your incompetent and corrupt ABLP? You need to wake up and come again. As you wake up we expect to see more articles from you singing the praises of the government. Enjoy your office while it lasts.

    • You good @ Antiguan Patriot, I can’t read anything that this man has written.

      He tries his best to come over as reasonably in what he’s trying to say; however, a couple of things comes to mind about his COHERENT RAMBLINGS (isn’t this an OXYMORON?).

      1), his links with this current self-enrichment ABLP government, and 2), – and just as bad -, he was awarded a knighthood (???) by the UK monarchy 🤮 … need I say more?

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