Rising cost of living: Govt to buttress budgeted $5B in relief measures

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President Dr Irfaan Ali

 

With Guyana buffeted by the global rise in cost of living, President Dr Irfaan Ali on Tuesday reassured that his Government is aggressively consulting with stakeholders to come up with solutions that will ease this burden on citizens.

On the sidelines of the commissioning of a Guyana Water Inc (GWI) well, the Head of State, in response to calls for the excise tax rate on fuel imports to be lowered, reminded that the Government had already made such a reduction from 20 per cent to 10 per cent for the importation of gasoline and diesel.

“We’ve been continuously reducing the tax on fuel [importation]… So that has been continuously done even without anyone calling. [But] at some point there will be an assessment because the country still has to get revenue.”

“So, at some point, there will be an assessment as to what additional measures we can look at,” President Ali told this publication asked about further reducing the excise rates to offset global increases which have resulted in gasoline now retailing locally as high as $246 per litre.

During an interview with this media house earlier this week, two major Private Sector bodies – the Georgetown Chamber of Commerce and Industry (GCCI) and the Private Sector Commission (PSC) – contended that a more impacting intervention is needed to help Guyanese through this time.

To this end, they called for the removal altogether of the excise taxes on fuel and income taxes – even if just temporarily – until the cost of living stabilises, as well as relief grants to citizens.

But again, President Ali reminded that nearly $5 billion was set aside in the 2022 Budget towards various interventions aimed at easing the burden of the rising cost of living. He disclosed during the event that his Government is currently finalising an approach for a national consultation on the best options to address the “multi-faceted problem” caused by rising prices.

“We’ve already started that and the Government will be continuing, aggressively, discussions with a cross-section of Guyanese [and] communities so that we can come up with the best possible approach – listening to ideas, listening to some of the connected issues and then coming up with some policies,” the President added on the sidelines.

The Head of State pointed out during his remarks on Tuesday that the global challenges brought on by the COVID-19 pandemic are now being exacerbated by the Ukraine crisis which has contributed to the world prices for fuel skyrocketing to US$127 per barrel as well as putting a dent in the global wheat supply by 40 per cent.

In fact, the National Milling Company of Guyana Inc (NAMILCO) last week announced a 15 per cent increase of its flour with immediate effect. The local company said that in addition to the price of wheat being 40 per cent higher than before, there have also been increases in the cost of packaging, additives and fuel hence it can no longer sustain operations at the current flour price levels.

But according to President Ali, “It’s very easy for some sectors to say the price of gas is up so we shall not affect our revenue stream, we will take up our fares. But it’s far more complex for the Government because an increase in gas price and oil price does not only affect the vehicles on the road. It affects the input costs for every single thing. But a Government must manage in such an environment.”

On this note, the Head of State said he wants to build a Guyana that will be resilient to external shocks hence it is taking the lead in ensuring food security so that the country can be self-sufficient and sustainable as possible especially as it relates to the supply of food and basic commodities. As a result, he disclosed that soon Guyana will be examining a variety of wheat to ascertain whether the country can start cultivation to meet local requirements.

Nevertheless, despite the global challenges, President Ali outlined that his Administration has not only been managing a country with one of the best debts to GDP ratios but has also been able to keep public servants employed, expand employment opportunities, increase salaries and other welfare benefits – all while embarking on a massive infrastructure transformation programme.

“Sometimes we take these things for granted because the Government can be so responsive and responsible that we do not take enough time to understand the circumstances under which the Government is being responsible and responsive… In just one month, [world events are] driving up the costs of transportation, cutting off supplies and as if this was not enough, China, with just an emergence of a few [COVID] cases, has gone into lockdown again. This is the environment under which the Government, not only in Guyana, but governments globally are operating in.”

Reminding that his Government has already taken a series of steps to reduce the burden of the COVID-19 pandemic over the past two years, the Guyanese leader reassured that this will continue. He noted that when the public utility companies such as Guyana Power and Light (GPL) and GWI did their 2022 budgets, they did not cater for oil prices to skyrocket.
“The main impetus for power and water is fuel, energy costs – that has increased by 100 per cent. But here in Guyana, the Government is not going to allow that increase to be translated to the people of the country. We said to both entities that “you are not going to increase by a cent”; the Government will take up the additional expenditure and fill the gap.”

“That is how a responsible governmental operates… in less than six years ago, you had a Government that showed you that their solution was to add a tax on the water and remove the [electricity] subsidy for pensioners. But sometimes, you know we don’t appreciate the condition on the words the Government has delivered,” the President asserted.