PPP/C Govt took deliberate steps to mitigate impact of global food price increases – Pres Ali

… says more measures planned for 2024 to address cost of living

In light of the steadily increasing food prices on the global market, affecting many countries, including Guyana, President Dr. Irfaan Ali related that Guyana has managed to navigate these challenges successfully thanks to the careful measures implemented by his government.
During an address to the nation on Friday evening, the president spoke on the issue of the cost of living which has impacted the Guyanese populace while pointing to the sharp rise in international food prices between 2021-2022 – a period when the COVID-19 pandemic hit the world.
“From the production side, there was limited production because farmers were not going to the farms, factories were not opened, agro-processing plants were not opened, and then from the raw materials side, the supply was also limited. So we went through those things, dealing with the COVID-19 pandemic and the consequential effects.”
“We saw stimulus packages, interest rates cuts. And this is what this government did in response. As soon as we came in, not only did we have to find billions of dollars to build a COVID-19 facility, but we also had to create stimulus packages, cut interest rates, and direct financial support to individuals, businesses, and families,” President Ali said.

On top of the COVID-19 pandemic contributing to inflation, the world also had to contend with the Russia/Ukraine war and the middle eastern conflicts. These back-to-back crises have resulted in a spike in inflation in as many as 179 countries.
“Let’s look at what is happening globally. Overall inflation figures. According to Global Finance, inflation spiked in 179 countries, out of 194. And let us look at some of the regions and effects. Developed countries such as the United States and the United Kingdom, recorded inflation rates that reached a 40-year high in 2022.”
“In 2022, inflation rates in Canada were the highest since 1983. The European Union also recorded the highest inflation rate in four decades during 2023. Meanwhile, the inflation rates of the largest economies in Latin America reached a 15-year high in 2022,” President Ali said.

Measures
Despite these worldwide increases in inflation, which resulted in Guyana importing much of these price hikes, the government took deliberate steps to mitigate this. The government provided direct support to farmers, lowered taxes on items critical to the agri sector, increased public sector wages, and implemented cash grants.
For instance, the government removed Value Added Tax (VAT) on machinery, and corporate income tax and reversed drainage and irrigation (D&I) fees. VAT was also removed on medical supplies, electricity, and water, measures which resulted in the people of Guyana saving almost $3 billion annually. Another measure taken was removing the taxes on building materials.
Meanwhile, the government restored the subsidies for utility services, as well as increased old age pension and public assistance by more than 75 per cent and 111.1 per cent respectively. This resulted in over $13.4 billion and $2.8 billion, respectively, being placed back into the hands of these beneficiaries.
The government also took the step to establish a boiler breeders’ facility locally and constructed shade houses, farm-to-market roads, and D&I infrastructures. The rising fuel and freight costs were also addressed, while the wages and salaries of public servants were increased by more than $90 billion.
To boost the income of many households, the government reinstated the ‘Because We Care’ cash grant, placing over $22 billion into the hands of parents over the last four years. Further to that, the one-month tax-free bonus to the disciplined services was reintroduced, placing $4.1 billion into the hands of the members.

2024
Ali compared the global and regional inflation hikes, with Guyana’s own, noting that Guyana did a commendable job managing its inflation.
“When the inflation rate is rising in these countries and China and India, and we have to import, then the cost of production and transportation are going up. We’re importing those rising costs.”
“But what we’ve done as a government, very successfully, a model that is now being looked at, is the type of measures that we placed to cushion that inflationary cost. So that the effect was not transferred to the consumers.”
Further, President Ali assured that even more strategies would be rolled out before the end of 2024. According to him, the government will be addressing a number of policy areas that will ensure Guyanese can have more disposable income and stimulate economic expansion.
“This is the global environment in which we are a part of and operating. When you look at our figures and the inflation rate for Guyana compared to all of these regions, it is remarkable in the way that we have been able to manage our economy,” President Ali said.
“The way we have been able to cushion these costs. And the way we implemented measures that targeted directly and indirectly. First, the increase in production. Two, to disallow the transfer of inflated prices to the consumer and fourthly, to ensure that the most vulnerable of society were protected.”