–President Ali advises local private sector

PRICE constraints, initiated by the COVID-19 pandemic, have disrupted household consumption and reduced the spending power of individuals significantly; however, a possible short-term solution, as recommended by President, Dr Irfaan Ali, could be an adjustment in the margins of businesses.

Rising commodity and service prices are not unique to Guyana, as countries the world over have been contending with the COVID-19-induced situation since early 2020. The International Labour Organisation (ILO), in a report issued in December last year, said that the pandemic along with the associated lockdowns, mobility restrictions and physical-distancing rules, have not only led to a significant increase in unemployment and considerable income losses for many people, but have also altered the spending patterns of consumers and the level of price inflation [the rate of increase in prices over a given period of time] that they face.

In particular, the lockdown measures have affected the supply of and demand for certain products and, hence, their prices. In August 2020, according to the ILO, the prices of all goods and services were on average 2.7 per cent higher than in August 2019. It has been proven that increases in food prices could have a dire impact on living standards of lowerincome households, which generally spend most of their incomes on food. Even a small increase can confront the members of such households with difficult decisions, the ILO cautioned.

While Guyana is revered as a food-secure nation, the cost of various imported commodities which are oftentimes a necessity, have affected consumers and, by extension, households. During a press conference on Wednesday last at his official residence, State House, President Ali responded to a question about the issue of rising prices, and explained that with the world still contending with the effects of the COVID-19 pandemic, production facilities across the world are still not operating at full capacity, as some are even functioning at less than 50 per cent.

The World Trade Organisation (WTO) has said that the pandemic represents an unprecedented disruption to the global economy and world trade, as production and consumption are scaled back across the world. Specific to food production, President Ali said there is a major global debate on this topic, especially because of what is happening in two of the leaders in this regard, India and Brazil.

Both of those countries have been facing the brunt of COVID-19, with India recording over 19 million cases and over 212,000 deaths, and Brazil, 14.7 million cases and over 404,000 deaths.

“India and Brazil are affected the most by COVID-19; of course we will see added pressure on commodity price and price for services,” President Ali reasoned.

Additionally, global trade has also been impacted, as travel restrictions, instituted in many countries to reduce the chances of imported cases, have driven up the cost of shipping.

“The cost of shipping has gone up enormously… nine months ago, to ship a container out of China it was about US$2,500; today it is close to US$10,000 [a 75 per cent increase],” President Ali said, while providing a realistic example of the situation.
The cost burden also extends to food production, since the price for grains [a product used in poultry farming] has gone up tremendously globally.
“Once that goes up, it affects the cost of poultry, meat,” President Ali lamented.

Price fluctuations are unavoidable, even with the government making the poultry industry zero-rated. In future, the volatility of costs in the poultry sector could be less, since the government is offering special incentives, inclusive of land, for planting of corn and soya bean to satisfy the local and regional feed-mill demands.

As it is now, not just in the poultry, but also in other sectors, increasing prices cannot be controlled easily.
“…we have no control over these factors, it is imported inflation and costs we have to take care of,” President Ali reasoned.
Further, the President said: “What we have done by adjusting on the tax side, adjusting on the vat side, is our local response to cushion and minimise the effect.”

The government has also been working closely with the private sector to ensure that Guyana’s economy remains stable amid fluctuations on the global scene. In the case of the private sector, the President believes that their role could be extended even further, especially as part of their social responsibility.

“While we work in partnership with the private sector, they have a responsibility, a social responsibility to adjust margins to help the consumer, and we are hoping that the private sector would help also and there would not only be government policy and measures in addressing this global issue,” the Head of State related.

A coordinated local effort is needed, especially with the WTO saying in March that the relatively positive short-term outlook for global trade is marred by regional disparities, continued weakness in services trade, and lagging vaccination timetables, particularly in poor countries.
COVID-19 continues to pose the greatest threat to the outlook for trade, as new waves of infection could easily undermine any hoped-for recovery, the organisation said.

“The strong rebound in global trade since the middle of last year has helped soften the blow of the pandemic for people, businesses, and economies,” WTO Director-General, Ngozi OkonjoIweala said, adding: “Keeping international markets open will be essential for economies to recover from this crisis and a rapid, global and equitable vaccine rollout is a prerequisite for the strong and sustained recovery we all need.”

“Ramping up production of vaccines will allow businesses and schools to reopen more quickly and help economies get back on their feet. But as long as large numbers of people and countries are excluded from sufficient vaccine access, it will stifle growth and risk reversing the health and economic recovery worldwide,” she said.

Guyana has so far been fortunate in this regard, as the country has been able to access enough vaccines, through proactive means, to conduct an ongoing, aggressive vaccination campaign.

As of Tuesday last, 128,740 people had received at least their first COVID-19 ‘jab,’ while more than 2,941 persons have already received their second doses, which means that they are fully immunised.