IMF on our inflation

The IMF has delivered an inconvenient message for those who insist that nothing the Government does benefits ordinary Guyanese since it clearly concludes that the latter’s interventions have helped contain price pressures. But the Government has resisted converting that finding into a declaration that the cost-of-living problem has been solved with president Ali declaring a raft of other measured to rope in inflation.
The IMF Executive Board assessment recognises that fiscal and supply measures have cushioned price pressures. Average inflation was 3.3 per cent in 2025, with 4.1 per cent projected for 2026. It also finds no clear evidence of economy-wide overheating, while recommending continued vigilance. These are encouraging findings in an economy undergoing extraordinary expansion.
Government deserves credit for using public resources to soften the impact of international shocks. Electricity subsidies and tax exemptions, for instance, provide protection that consumers would otherwise have to finance themselves and alongside social transfers are important elements of the response. President Ali has raised concerns over heavy markups by intermediaries between farmers and retailers and proposed localized farmers’ markets, starting with one in Sophia, to give producers direct access to buyers and lower food costs. The government is pushing domestic alternatives in the shopping basket such as expanding local water bottling capacities rather than relying on expensive imports, alongside large-scale investments in national agriculture and value-creation. Those who dismiss every subsidy as waste should explain how readily they would volunteer households to absorb the entire adjustment.
But this does not mean the IMF’s assessment cannot benefit from further scrutiny since success in containing measured inflation is an important achievement, but it cannot establish how adequately poorer families are protected. Towards this end, the Board itself calls for updated price statistics and a new household budget survey. Until that evidence improves, sweeping declarations about universal prosperity run ahead of what can be demonstrated.
The Fund’s recommendation to replace broad relief gradually with targeted support also deserves a practical examination. Better targeting can direct more assistance towards households that need it. But an unreliable register, inaccessible application process or rigid income threshold can exclude precisely the people it is supposed to help. Government should build and test the replacement before withdrawing existing protection.
A useful next measure might be a regularly paid cost-of-living supplement for low-income households, with adjustments tied to an independently measured basket of essentials. It should include accessible registration, provision for informal workers and a straightforward appeals process. Predictable assistance would help families plan between the larger grants.
While working to reduce long-term exposure to imported inflation and global supply disruptions, the administration is investing in the gas-to-energy project, local oil refineries, expanded fuel storage capacity, and renewable energy (solar and hydro). But perhaps electricity assistance could likewise evolve towards a subsidised basic consumption allowance, preserving affordable essential use while reducing support for heavier consumption.
Government could also establish a public price-monitoring programme covering essential goods across coastal and hinterland communities. Where taxes or import costs fall – such as government’s zeroing out the excise tax on refined fuel consumers or targeted investment in food production – should be able to see whether retail prices follow. Persistent discrepancies should prompt competition investigations where evidence warrants them. A tax concession that merely enlarges a commercial margin is an expensive way to congratulate a businessman.
The more durable response lies in reducing the cost of supplying necessities and the government has already increased agricultural support that prioritises drainage, dependable irrigation, storage, refrigerated transport and stronger links between farmers and markets. The credit provided that comes with technical assistance must have measurable production outcomes since while producing more is useful, getting that production affordably onto the consumer’s plate is the decisive step.
Finally, government spending must expand the economy’s ability to deliver since funding can grow faster than engineering, contractor and administrative capacity. That is a warning about execution, rather than proof of general overheating and demands creating more skilled personnel.
Guyana has earned recognition for cushioning its citizens. The next achievement should be making essential living costs sustainably affordable. Oil wealth gives us the means. Competent delivery must provide the result.