As a result of the global spread of the deadly SARS-CoV-2 Virus (COVID-19) in 2020, the world witnessed a first-time phenomenon where interconnected activity everywhere came to a grinding halt. International borders were closed, most businesses and service industries stopped operations, airlines and other transportation services were grounded, cargo shipping companies were stalled, and food production slowed down significantly – all of which resulted in a shortage of essential foods, goods and supplies, a lack of access to essential services, and a dramatic and sudden rise in inflation.
Today, as the virus becomes somewhat benign, relative to the onset of its Delta variant, and we’ve come out of the peak of the COVID crisis, the world has found itself engulfed in yet another global crisis – the impact of the Russia-Ukraine war.
The devastation caused by Hurricane Irma in 2017, COVID-19 virus in 2020 and the Ukraine-Russia war in 2022, has the world going through one of the most inflationary periods in history – certainly in modern times. Some economists refer to it as “stagflation” – a term used to describe an economy that is malfunctioning, in which prices keep soaring while economic growth either stops or declines.
The world today, is experiencing declining and reversing economic activity, an increasing demand for and a scarcity of essential goods and basic food items, while the cost of available foods and goods keeps rising – unprecedented hyperinflation.
Additionally, there is global scarcity and unavailability of oil and there is interrupted shipping of oil and diesel – indicators of economic downturn and triggers for hyperinflation.
Inflated prices are noted at fuel stations everywhere. As of June 17, 2020, globally, the average price of gasoline at the pump is US$5.5 per US gallon or US$6.5 per imperial gallon. In the US, the average price is in excess of US$5 per gallon. Right here in Anguilla, the price of gasoline is EC$21 per gallon and the price of diesel is close to EC$18 per gallon. Granted, the cost of fuel is expensive. However, in Anguilla, we need to recognise the ‘knock-on’ effect of these prices on the cost of other goods and services on the island, if we can get them.
We also need to recognise that the increase in diesel prices, in particular, has a direct relationship with the price of imports and the freight cost to bring food and other goods into Anguilla. Keeping in mind that we, in Anguilla, import almost everything that we use or consume.
The price of diesel also has an impact on the price of electricity on Anguilla, since the island’s electricity supply is “fuelled by diesel”. And just like everyone is affected by the increase in fuel prices at the gasoline pump, everyone will be affected by the increase in diesel prices at the electricity company. No one business, company, or person, should be expected to absorb the increase in fuel prices, especially when those prices are changing on a daily basis. We all must share in the collective burden of hyperinflation, although governments have a social responsibility to assist their most vulnerable populations in times of need.
It was noted in the press, just last week, that the Cayman Islands’ Government has put $5 million in reserve to help their most financially vulnerable citizens subsidise their electricity bills. What is Anguilla’s government doing?
In a media message by Prime Minister, Mia Mottley, to the people of Barbados, she appealed to them to “cut and contrive”. She suggested that they go back to the practice of “carpooling”, engage in “back yard gardening”, and, “whereas in the past they might have cooked a big pot of chicken, now they may need to stretch it to only have chicken gravy with rice,” – during this unprecedented time. What message is Anguilla’s government sending out to its people?
Some questions raised by many in Anguilla are: What is our government’s response to this high increase in prices? How are we helping citizens and residents to get through this period? How are we helping businesses to get through this period? Can we afford to lose our indigenous businesses at this time? How is the government encouraging a change in consumer behaviour at a time like this? Will government lead by example in this regard? What creative ways can we employ to ease the burden that local businesses face, that ordinary citizens face – as together we try to cope with this uncertainty?
Unfortunately, it seems that our government is not hearing these questions, for, in spite of all the above-mentioned issues, the government is still determined to introduce a broad-based tax on all residents of Anguilla – the Goods and Services Tax (GST) – at this time of unprecedented hyperinflation. Notably, the government has also made provision for a basket of basic foods, and a list of essential services, to be tax-exempt. But, is that really enough?
Unmistakably, if this period of hyperinflation continues much longer, there will be casualties along the way – some of which we cannot directly blame the government for. However, we can blame the government for its inaction in helping businesses and citizens cope with this period of unprecedented inflation; for delayed response to ensure that struggling businesses and services, which are directly and indirectly impacted by this hyperinflation, can actually come out of this on the other side successfully.
Just as we were able to get some financial assistance from the British Government to cope with Irma and Covid, we should be able to secure assistance to cope with the impact of the Russia-Ukraine war. Afterall, it is a war that is supported by the British Government which has more control over the war than it had over Covid or Irma.
Right now, the fall-out from the Russia-Ukraine war requires another subsidy, another bit of support, or temporary reprieve, from the British Government to assist the government of Anguilla in helping its citizens – and other critical sectors within the economy – to get through this period.
We know this will not last forever. We know that there is an end in sight somewhere down the timeline. That realisation alone is reason enough why something needs to be done now to help to ease the burden that citizens and businesses are suffering as we try to cope with this extremely difficult situation. Hyperinflation is affecting the world, the region, and Anguilla.
What is Anguilla’s response to this unprecedented global and local hyperinflation? The citizens are listening. ‘We can’t just tro water pun dat.’
