There is little that the Turks and Caicos Islands can do to thwart the rising worldwide inflation, this according to Minister of Finance Investment and Trade Hon. E. Jay Saunders.
Tabling the scripture-lased $13mllion 1st Supplementary Appropriations Bill 2022-2023 in the House of Assembly on Tuesday, July 26, Saunders pointed out that while the TCI, by itself could not reverse the harsh economic condition the world is currently facing, it would do the best it could to cushion the blow on the people of the Turks and Caicos Islands.
“It is clear that there is very little that the Turks & Caicos Islands Government can do to reverse inflation, as we do not have the corresponding levers to pull like a country as the United States has. However, God has blessed us with the ability to ‘Carry each other’s burdens’, and that is exactly what this good, good government of the people will do today,” Saunders crowed.
Saunders said further that the inflation the TCI was currently experiencing was an imported one, since it is not a manufacturing economy, and that almost 100 percent of the items consumed here are from imports.
“TCI doesn’t have a manufacturing economy – i.e. there is practically no manufacturing taking place here. Almost 100% of the items that we consume are imported. As a result, we here in the TCI are experiencing what is referred to as ‘imported inflation’,” the finance minister argued.
He added: “Actually, I would say it’s Imported Inflation Plus – i.e. we’re experiencing the inflation of our largest trading partners - mainly the USA - plus an additional amount on top of it. And according to the Pew Research Center analysis, “Inflation rates have doubled in 37 of 44 advanced economies over the past two years”. That’s 84% of them.
“And it’s not just the advanced economies, as according to Carmen Reinhart in her article on ‘The Return of Global Inflation: Today's inflationary surge is being felt…also by the majority of emerging markets and developing economies’.”
Saunders revealed that 78 out of 109 emerging markets and developing economies were experiencing annual inflation rates above 5%.
“That’s 72% of us,” he pointed out,” he said, quoting Isabel Schnabel, a Member of the Executive Board of the European Central Bank, who stated on May 11, 2022 that in April, inflation in the euro area was expected to have increased to a new record high of 7.5%, causing significant concern among firms and households.
“A large part of the rise in inflation reflects the exceptional surge in energy prices. Over the past 12 months, energy accounted, on average, for around half of total headline inflation.
“Because the euro area is a net importer of energy, this surge in inflation is often referred to as ‘imported inflation’,” Saunders noted. Do you see the parallels with the TCI? Like the EU, a large part of the rise in inflation here in the TCI is due to the exceptional surge in energy prices,” he further stated.
“There is the issues of ‘food price inflation’, as during 2021, 12-month increases in food prices exceeded 5% in 79% in 86 out of 109 of the emerging markets and developing economies. That’s us again! Actually, in Latin America and the Caribbean, food and energy were the main contributors to inflation in 2021, according to Carlos Jaramillo and Robert O'Brien in their article ‘Inflation, a rising threat to the poor and vulnerable in Latin America and the Caribbean’,” the minister stated.
He said government has been addressing the issue by rolling out a US$15M Relief Package in March, consisting of a 25% reduction in Fuel Tax, reducing it from $0.85 to $0.64, along with a reduction in the Customs Processing Fees (CPF) from 7.5% to 5%, which he said came on the heels of an approximately US$7M anti-inflation Stimulus Package which consisted of a US$500 payout to qualified Turks and Caicos Islanders and British Overseas Territory Citizens living in the TCI.
This latest relief - the US$12M stimulus package, should so see 12,000 Turks and Caicos Islanders and British Overseas Territory Citizens, receiving a one-off payout of US$1,000 to help out with the increase in the cost of living.