In Saint-Denis de Reunion, February 25, 2022. CHRISTOPHE ARCHAMBAULT / AFP
“Here we are being punished twice,” laments Serge Hoareau, mayor of the city of Petite-Ile and president of the Association of Mayors of Reunion Island (AMDR). In addition to increased material prices, the island, which is heavily dependent on the outside world, where more than 95% of imported goods arrive by ship, increases the cost of sea freight. Due to the global traffic disruption related to the health crisis, container prices on routes with Asia and Europe have doubled or even tripled on average. This multiplies the effects of inflation caused by the war in Ukraine.
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“Companies can no longer keep their prices on construction sites,” says the elected representative from Reunion. It gets very complicated. Mr Hoareau cites as an example a road construction contract that his municipality secured a few months ago for a sum of just over 5 million euros. With a first tranche of 1.4 million euros. “The building contractor told me that raw material inflation would result in additional costs of EUR 400,000. And he asked me to cancel the contract for the other two tranches because he can’t keep his prices. »
Current expenses
The elected official is concerned about the long-term funding of this type of projects, which go through the state recovery plan and imply that the sites must be completed by the end of 2023. This is included in the base of expenditure eligible for state grants and European aid,” he adds added.
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Inflation also affects local government spending. The fuel budget of the town of Petite-Ile, which has 12,500 inhabitants, rose from around 5,000 euros a month in January to 7,500 euros in May. School meal prices are skyrocketing. He cites the extreme example of frozen turkey cutlets imported from mainland France, which went from €5.67 to €9.81 per kilo, a 73% increase. Sea bream to take away (traditional Reunion dish) up 26.64%. “Poultry is very practical to take into account all the religions and dietary habits of everyone on Reunion,” explains the mayor. A city in Reunion [la ville du Port] has just announced that the school canteen will be free for almost all families from next school year. I don’t know how my colleague will fare. »
The President of the Mayors of Réunion announces that the municipalities “have to make decisions”. “We will be forced to abandon projects for lack of funds while simultaneously dealing with the social hardship of a population that is bearing the brunt of these increases. According to INSEE, three times as many people are affected by monetary poverty in the sense of material and social deprivation on La Réunion. And only 46% of 16-64 year olds have a job, 20 points lower than in mainland France.