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Targeted Assistance! Albert Area Rep, IMF, World Bank agree on how to fight ‘cost of living' crisis

To combat the effects of the global cost-of-living crisis, the government needs to adopt the advice of leading economic agencies and implement targeted social assistance to vulnerable households, Honorable Tracy Panton told The Reporter Thursday.

Panton, the area representative for Belize City’s Albert Division, while referencing the prescriptions provided by the likes of the International Monetary Fund (IMF), the World Bank, and the Economic Commission for Latin America and the Caribbean (ECLAC), said more direct measures to help struggling families must be taken.

Addressing the crippling costs of food and heighten inflation strictly from a regulatory approach is not enough,” said Panton. “The Government Administration seems to be toned deaf as it relates to the cries of the most vulnerable in our society that are being pushed further and further into the margins of poverty and to the recommendations of the IMF, the World Bank, and other like Institutions that have asserted that there is a responsibility of the Government to address the rise in inflation through social safety net programs and subsidies that provide immediate relief to our Belizean Families who are struggling and those MSME’s in particular who are engaged in the productive sector.”

Panton’s comment on a “strictly regulatory approach” is aimed at Cabinet’s recent decision to amend the Supplies Control Act, which, once enacted, grants the minister more regulatory powers, including the ability to implement a ticketing system for businesses that violate provisions of the Supplies Control regime.

Connected to a request from the Joint Union Negotiating Team (JUNT), the government has also indicated that it would expand the law to allow public servants to be able to issue the violation tickets under the amended law.

Recently, the Minister of Agriculture, Food Security and Enterprise, Hon. Jose Mai, met with local retailers—most from the Asian community—to discuss allegations of price gouging. Mai, speaking with the media, said, “There is an amendment to the Supply Control Act which was passed in the House. … That amendment is to deal with the allegation of gouging.”

Controller of Supplies Lennox Nicholson, for his part, said: “What we need to do as the enforcement agency is to be able to, to distinguish where imported inflation ends and gouging … We need to be able to … map through the entire distribution chain and identify exactly where the problem point may be.

Closely associated with this set of actions is apparently a consideration of expanding the items listed under the price-control regime, which itself is a regulatory approach, as Panton described.

Interestingly, the IMF has repeatedly advised governments to utilize policies that directly assist families.

As recently as Thursday, April 13, 2023, IMF Managing Director Kristalina Georgieva advised: “Further effort to reduce budget deficits is critical to support the fight against inflation and reduce debt, but this must be coupled with targeted support for the most vulnerable.”

This is a policy prescription that the IMF has reiterated throughout most of 2022 and has continued to promulgate.

But the IMF is not alone. ECLAC’s Executive Secretary José Manuel Salazar-Xirnachs, speaking at the World Economic Forum held in January 2023, said:

“In light of this situation, the key policy priorities for Latin America and the Caribbean should be to: … pursue fiscal reform to improve tax collection and tax revenues, as well as to shelter the region’s most vulnerable groups with specially tailored social and employment policies.”

The World Bank, in a recent 2023 report, stated: “Targeted support reflecting specific cost-of-living increases across households would be much more welfare improving.”

A 2020 World Bank Working Paper—entitled “Price Controls: Good Intentions, Bad Outcomes”—pointed out that “replacing price controls with expanded and better-targeted social safety nets, coupled with structural reforms, can be both pro-poor and pro-growth.”

Speaking during last month's budget debate, Panton had lamented the fact that despite the prescriptions from economists and economic institutions such as the IMF, the policy direction of the government’s spending appears not to be prioritizing the targeted social safety nets to help households combat the cost of living crisis.

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