–gov’t slashes gas, diesel prices to $215, $225 respectively per litre

SENIOR Minister in the Office of the President with responsibility for Finance, Dr Ashni Singh, on Saturday announced on behalf of the government a reduction of gasoline and diesel prices at the pump to be charged by the Guyana Oil Company Ltd (GUYOIL).

According to a press release from the Ministry of Finance, the gasoline prices at the pump will be reduced by 20 per cent, moving from $269 per litre to $215 per litre, while diesel prices will be reduced by 15 percent, from $265 per litre to $225 per litre. Those price changes will take effect from today.

During the first half of 2022, global oil prices surged more than 50 per cent, increasing from US$77 per barrel at the end December 2021 to US$120 in June of this year; having risen as high as US$137 per barrel primarily as a result of the Russian invasion of Ukraine, the impact of the dramatic increases in oil prices was significant and given the interconnected nature of the global economy, translated into higher costs of landing fuel in Guyana.

In order to mitigate the impact of rising global fuel prices on domestic consumers and the productive sectors to which fuel is a key input, the government lowered the excise tax rate on both gasoline and diesel from 10 per cent to zero per cent in March of this year.

It would be recalled that, previously, during the Budget 2022 presentation, the government lowered the excise tax on both gasoline and diesel from 20 per cent to 10 per cent so as to minimise the impact of rising global oil prices.

Authorities have since been progressively lowering the excise tax rate on both gasoline and diesel, from 50 per cent to 35 per cent in February 2021, 35 per cent to 20 per cent in October 2021, in keeping with the government’s policy to adjust the taxes on fuel in order to mitigate the impact of rising fuel prices on the world market.

Since assuming office in August 2020, the PPP/C government has implemented a suite of measures to ease cost-of-living pressures induced by a global rise in commodity prices, and to improve disposable income.
Aside from sector-specific measures, the government, since being elected to office in 2020, has introduced several measures to put more disposable income into the pockets of Guyanese. From the outset, Value Added Tax (VAT) was removed from water and electricity, a burdensome measure placed on the backs of Guyanese by the former coalition administration.

There has also been the constant increase in old-age pension and public assistance which, as it is, in one year put $2.3 billion and $432 million into the pockets of Guyanese.
Additionally, the PPP/C government reinstated the “Because We Care” cash grant and school uniform cash grant which stand at $30,000 per child in both public and private schools.

Every household in the hinterland will receive a $25,000 one-off cash grant; fisherfolk have started receiving a one-off $150,000 grant; farmers will receive $1 billion in fertiliser support, and there were and are many other initiatives geared at addressing the rising cost of living induced by the COVID-19 pandemic and the war in Ukraine.

The International Monetary Fund (IMF) recently commended the Government of Guyana for implementing effective policies to cushion the burden of high global commodity prices.
In a report documenting the conclusions of its Article IV Consultation with local authorities, the IMF said: “Staff broadly supported the authorities’ measures to temporarily ease the burden of higher global commodity prices on the most vulnerable groups of society, given the absence of adequate safety nets.”

The IMF, while supporting those measures, advised local authorities that there needs to be a gradual unwinding of the general subsidies provided through the tax system and moving to full pass-through of international prices to domestic prices, since the shock does not appear to be temporary.

This, the international financial institution said, should be done simultaneously with measures to further develop and strengthen a well-targeted social safety net system.
“In addition, a sustainable and feasible increase in capital spending to support the transformation of the Guyanese economy is needed, but within a framework that does not generate macroeconomic imbalances,” the IMF advised.

It was, however, acknowledged that the government has already been taking steps in this direction. Fiscal policy in 2022, according to the IMF, has been appropriately supporting growth, while considerably reducing the fiscal deficit. The government’s milestone $552B 2022 Budget has reduced current expenditures by about one per cent of non-oil GDP compared to 2021, while capital spending has been ramped up to support the non-oil economy.