|Liquidity and food prices |
GEORGE ALLEYNE Wednesday, December 5 2012
THE PEOPLE’S Partnership Government, where its planned expenditure is greater than its estimated revenue, should, as a policy position, seek to borrow money from Trinidad and Tobago financial institutions before attempting to obtain loans in the international marketplace.
Understandably, any such move would have to be in keeping with international rules and practices. But in this way it will stimulate the economy of Trinidad and Tobago rather than the economies of the main players in Corporacion Andina de Fomento (CAF) better known as the Andean Development Bank, or in other international banks.
Meanwhile, for the umpteenth time this column asks what is the extent of the loan secured by this Government from Corporacion Andina de Fomento and what are the terms and conditions? What is evident is that neither the demand for goods and services nor the continuing reluctance of the non-energy sector in Trinidad and Tobago to expand has been affected by the low interest rates which have been a feature in this country during the current international financial crisis.
Unfortunately, the liquidity in the banking system is high following on the difficulties being experienced by Trinidad and Tobago’s financial institutions as a result of the relatively low private sector demand for loans.
So that even though our banks have declared high profits, what should be readily understood is that the money supply is far less important than the actual flow of money. And the flow, or turnaround of money within the economy has been slow given the high level or liquidity in the banking system.
This column wishes, at this point, to make it clear that the above is not an invitation to the People’s Partnership Administration to increase its current absurdly high level of expenditure during the present fiscal year.
But until there is a greater accessibility of Trinidad and Tobago’s manufactured goods to traditional markets and the expanding Latin American market, Government should initiate steps which would see a greater degree of already planned borrowing from domestic financial houses.
I shift gears. In the wake of its recent removal of Value Added Tax (VAT) on thousands of additional food items, the People’s Partnership Government should seriously consider reintroducing the former People’s National Movement Administration’s policy of publishing comparative prices of foodstuff in supermarkets and groceries throughout Trinidad and Tobago. This should be designed to bring to the attention of consumers the relative prices of food in a bid to offer them an opportunity to effectively bring down their individual cost of living.
While, understandably, this would not deter several persons from shopping at supermarkets and groceries of their choice, regardless of cost, nevertheless it would provide middle and lower middle income consumers with choices in the current high spending Christmas Season and beyond. While supermarket and grocery owners and operators will continue to maintain and attract customers through bargains and good service, the regular publication of food prices at shopping outlets across the nation will provide consumers with an idea as to which centres will afford them choices in keeping with their respective pockets.
The differences in prices of not simply items, but brands, are well known.
While the November 15 removal of VAT on a wide range of items should have brought with it across the board slashed prices, the pre-Budget announcement of VAT removal saw almost immediate increases in the prices of many items. In all too many instances the additional prices were equivalent to the Value Added Tax itself.
In turn, some grocery stores, prior to the removal of Value Added Tax would offer to waive the tax in return for the non-provision of a receipt. But Value Added Tax apart the Government should publish food prices including the comparing of prices of vegetables sold in supermarkets and groceries with those sold in the Central and other public markets.
What is ironic is that on a Saturday morning several grocery owners and/or managers can be seen shopping for vegetables wholesale at the Portof- Spain Central Market off Beetham Highway. There, many of them would be seen purchasing chive, ochroes, cabbage and cauliflower, among other produce. Additionally, there are scores of consumers, who exercise a preference to shop for vegetables and other food items at the Central Market.
The cost of living, together with the relatively modest wage and salary increases as a result of the current global economic downturn, demands that, particularly, persons of lower incomes be given the opportunity to exercise choices in keeping with their restricted budgets.