To Stop Inflation Protests, Panama Fixes Prices Of Groceries, Medicine

After enduring weeks of increasingly intense protests, strikes, and highway blockades that led to fuel and other product shortages, the Panamanian government last week announced it will exert control over the prices of 72 food items, and this week agreed to impose price caps on 150 medicines.

“With the regulation of the 72 products, the cost of the basic food basket would decrease by 30%, a savings of more than $80,” according to a statement issued by the office of President Laurentino Cortizo. Panama uses the U.S. dollar as its currency.

Per TeleSUR:

The agreement covers actions to ensure the price stability of 72 products of the basic food basket, covering rice, bread, different types of fish, sausages, chicken, vegetables, and legumes, as well as cleaning and toiletries products.

In addition to the medicine price caps, the government said it would also set up channels for the direct purchase of medicines, in an effort to alleviate shortages at public hospitals. The price controls will be accomplished through a combination of caps, subsidies, tariff reductions and limits on margins.

The commitment was the culmination of the latest round of Catholic Church-mediated negotiations between the Panamanian government and representatives of a coalition of protesters that included labor unions, civic organizations and indigenous people. The broad protest movement was initially sparked by teachers striking over the higher cost of their commutes, due to higher gas prices.

So far, the measure has had the desired effect. Panamanian Security Minister Juan Manuel Pino said the country’s roads were “all open” for the first time in weeks, and teachers returned to school on Tuesday, Aug 2.

It remains to be seen how long the price measures will placate protesters, who were also acting out against a government they see as corruptly padding the pockets of officials and their families and cronies.

The price-control announcement is just the latest in a series of accommodations over the past several weeks.

On July 11, Cortizo capped the price of gas at $3.95 a gallon for all buyers — a price 24% lower than the end-of-June price. He also promised price caps on 10 basic goods, including pasta, beef loin, vegetable oil and canned sardines. However, the demonstrations continued, with roadblocks imposed on many highways, including the critical Pan-American Highway. That prompted Cortizo to cut the price of gas again just six days later — that time, to $3.25.

The government continues to engage in talks with the protest coalition, which has many other demands, including another cut in fuel prices, lower medicine prices and allocating 6% of Panama’s GDP to education. Another demand is the establishment of a maximum profit margin for economic intermediaries, such as product distributors, according to People’s Dispatch.

Paired with the growing set of price caps, the protesters threaten to push Panama deeper into a dark spiral of government economic control and public discontent over the unintended consequences.

Source: ZeroHedge

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