Govt absorbing global cost shocks to protect consumers – Pres Ali

President Dr Irfaan Ali has stood by his Administration’s stewardship of the economy amid a turbulent international environment, pointing out that fiscal interventions, subsidies and other measures have helped shield Guyanese consumers from some of the effects of rising global costs while maintaining economic growth.

Speaking about the country’s Mid-Year Economic Report, Ali said Guyana’s economic performance must be viewed against a backdrop of global upheaval, including geopolitical conflicts, supply chain disruptions, inflationary pressures and climate-related shocks.
“While I acknowledge the tremendous continued growth and advancement of our economy, as you rightfully pointed out, Guyana is not an isolated case,” the President said.
“We do not exist in a hemisphere by ourselves. We are part of a global system,” he added, noting that the global system has experienced significant shocks that have created short-, medium- and long-term challenges for economies worldwide.
Ali pointed to conflicts in Europe and the Middle East, disruptions to international trade routes, rising transportation costs and weather-related impacts on food production as factors affecting Guyana.
He noted that despite the country’s rapid growth, Guyana remains heavily dependent on imports for many of its consumption needs and productive activities.
“We still rely on imported refined products to drive this expansion,” he said, adding that changes in the global trade environment have contributed to increases in the cost of goods, materials and services.
The President also highlighted increases in the cost of fertiliser, grains, natural gas and other inputs used in agriculture and industry.
He pointed specifically to the impact of higher fuel-related operating costs faced by the Guyana Power and Light Inc (GPL).
“The war in Ukraine and Russia continues, driving up the cost of fertiliser, grains, natural gas. The Middle East war has taken natural gas out of the global system,” Ali said.
He explained that natural gas is critical for energy, fertiliser, agrochemicals and the pharmaceutical industry, meaning increases in its cost can have wider effects.
According to Ali, the costs associated with imported agricultural inputs, machinery, transportation and insurance are also being passed on to Guyana.
He said diesel costs faced by GPL had increased by 89 per cent from the beginning of the year to the time of the interview.
“…as a Government, we have not passed on a cent of this increase to the consumer,” he said.
Ali said similar pressures affect the Guyana Water Incorporated (GWI), since much of its operations are also linked to energy costs.
“The Government continues to subsidise and absorb these shocks,” he said, noting that while oil and gas revenues had increased by 33 per cent, greater levels of subsidies were also required for energy and water.
The head of state also pointed to droughts and floods in various parts of the world, which have constrained agricultural production while demand for food continues to rise.
“We are not spared from that,” he said.
Ali maintained that Government intervention has been critical to containing inflation and stabilising prices.
“To manage this global challenge, manage the local challenge that we have, and tame inflation, and keep prices at the level we have kept it, speaks volumes about, one, our management of the economy, [and] two, the type of policies and programmes that we are implementing to safeguard the population and to protect against price shocks,” he said.
He said Guyana is also facing climate-related pressures, with excessive rainfall earlier in the year affecting production and prolonged dry spells creating additional difficulties for agriculture.
“So our production would have been affected,” Ali said. “Climate challenges are affecting us.”
The mining and construction sectors have similarly faced higher costs associated with imported equipment, fuel and transportation.

Strategic interventions
Nevertheless, Ali said strategic interventions have allowed Guyana to continue recording growth while cushioning citizens from some of the external shocks.
He said one of the Administration’s challenges has been balancing public expectations with the increasing cost of maintaining and expanding services, including healthcare, education, social assistance, pensions, transportation support, and infrastructure.
“The challenge of meeting the expectation of the people, financing that expectation, financing the existing programme and achieving the existing programme despite the increase in the costs and the price… all of these things are ongoing at the same time,” he said.
Ali said programmes including the “Because We Care” grant, transportation assistance for students, higher old-age pensions, salary increases, and expanded healthcare services continue while the Government seeks ways to cushion the effects of higher costs.