Global supply chain crisis fuelling commodity shortages, price increase
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President Dr. Irfaan Ali
President Dr. Irfaan Ali

–government working assiduously to address this problem, says President

AMID a global supply chain crisis as a result of the COVID-19 pandemic, which has led to major shortages and the increase in prices of goods and services, President Dr. Irfaan Ali has assured the nation that his government is working assiduously to implement measures to cushion these effects on Guyanese.

President Ali, while addressing the nation on Monday, spoke of how the global supply chain has shaken economies, but gave the assurance that his government will pursue programmes to improve the living conditions of Guyanese, and to alleviate the effects of the global crisis on Guyana.

Giving an example of how the global supply chain affects consumers, President Ali explained that if the price of grain, an ingredient used to make chicken feed stock, increases, then farmers would purchase the feed stock at a higher cost, which will inevitably lead to the cost of chicken increasing as well.

“One of the important measures is to have more local consumption, because if the supply chain is not delivering in a timely manner, and is delivering at a price that is not affordable, then you have to create more programmes; give more incentives to increase local production,” President Ali said.

President Ali disclosed that at the level of the Caribbean Community (CARICOM), Heads of State have been pushing an agenda of “food replacement”, whereby the objective is to have a 25 per cent reduction in the region’s food import bill, and having local production fill that void.

Further, President Ali stated that incentives are necessary, such as at the level of production to reduce input cost of production, which will inevitably reduce the price of finished products, and additionally measures are needed to cushion the net effect on the increased cost of freight.

In addressing the cost of fertiliser, which has seen an increase in price globally, President Ali stated that the government is “not waiting for the situation to correct itself” but “is actively pursuing bilateral discussions to have a direct import of fertiliser” to prevent an increase in food prices locally.

“Importantly, too, we have to put more resources into the economy, especially for the vulnerable people, so that they can have greater access to resources during these difficult global situations,” he said.

The Head of State reminded his audience of a slew of measures already implemented by the People’s Progressive Party Civic (PPP/C) administration since their assumption of office in August 2020 to help alleviate the challenges facing the populace.

VAT was removed on water and electricity, while the water tariff was reduced by five per cent, licence fees by 50 per cent, land rental fees were reduced, and VAT on mobile data was also reduced. Excise tax applicable to fuel imports was reduced from 50 per cent in February 2021 to 20 per cent in October 2021.

Government also implemented numerous non-tax measures intended to provide immediate relief to Guyanese, and increase household disposable income such as a one-off payment to public servants of $25,000, the reintroduction of the year-end bonus for members of the Disciplined Services, and the $25,000 COVID-19 relief grant per household.

There was also the education cash grant, which has now been extended to private school learners as well; an increase in the old age pension, and giving an extra month’s worth of pension to pensioners; an increase in public assistance; a public assistance grant; an electricity credit paid for certain households; the flood relief cash grants, and reduction in freight charges.

“The government has not been sitting down; every single day, every single month, we have been working out measures, we have been implementing measures to cushion this effect that we did not cause… That is global in nature that we cannot escape, because we are part of a global community,” President Ali said.

President Ali, however, charged that importers who benefitted from incentives such as the reduction in freight charges must uphold their “moral responsibility”, so that consumers are the ultimate beneficiaries.

“That moral responsibility is to pass on the benefits that you receive as a result of this intervention to the consumer, to minimise the impact to the consumer,” he said, adding: “This is not a global crisis that anyone should look at profiteering off.”

Drawing comparison to other major economies, President Ali referenced the United States of America’s consumer price index for October 2021, noting that the 12-month inflation rate was 6.2 per cent; Germany saw rates above four per cent and the United Kingdom has seen the highest increase since 1997.

“The net effect of this inflationary pressure is the increase in prices … and it is driven by issues in the supply chain, at the manufacturing end, at the logistics end, at the transport end, and now of course at the labour end,” President Ali explained.

President Ali highlighted that the forecast suggests that the supply chain prices underpinning the widespread hike in freight increase are expected to last longer than expected; the unfortunate result of which is shortages, and increase in prices.

However, the government is working to combat this, he said.

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