ALL EYES now turn to the upcoming budget presentation, in the wake of the Prime Minister’s acknowledgement on Thursday that the rising cost of living is having a deleterious impact on citizens.
“We really are cognisant that people on the lower end of the earning spectrum need some relief,” Dr Rowley said at a media conference at the Diplomatic Centre, St Ann’s, held after an uncosted three-day Cabinet retreat.
However, he suggested relief must not threaten opportunities.
“The best thing we have been able to do in managing this kind of problem is to manage inflation.”
It is heartening to see this kind of admission of the problems facing ordinary citizens. However, that alone is not likely to provide comfort. The Government would do well to go even further in its policies.
Already there is consideration of a possible increase in the minimum wage, which stands at $17.50. Dr Rowley has warned such a move – currently being weighed by Minister of Finance Colm Imbert and Labour Minister Stephen Mc Clashie – would have a ripple effect on inflation.
Any consideration of this issue must bear in mind which sectors of society are paid minimum wage, the extent to which increasing it will boost consumer spending, and the fact that salary adjustments throughout society have not generally kept pace with inflation.
Meanwhile, Central Bank figures indicate inflation has slowed, but it was still at six per cent in the latest monetary policy update. This reflects external and domestic pressures tied to an unstable global situation.
In the difficult calculations which the Cabinet must make on fiscal policy, it may well turn out that inflation supplies the best argument for bolstering disposable income in the hands of citizens.
There may be other areas, however, where relief might be more pertinent and less complicated.
President Christine Kangaloo’s recent call for better attention to be paid to disability rights points to the need for disability grants to be reviewed. Generally, the many other grants disbursed by the State need to be better focused to help those in need.
Of course, many will argue the cost of living is directly related to the pressing issue of crime. Businesses must spend more on security. Meanwhile, most crimes have economic motives.
After managing to hold the economy together during the pandemic, the Government now faces an uphill battle of jump-starting the economy.
Yet the PM’s signal that the budget will revert to a deficit (last year’s surplus was revised down owing to increased spending and falling revenues) suggests the Cabinet may not really be operating with much wiggle room.
Which is a shame, given the urgent need for more robust diversification.