Private Sector calls on Gov’t to cushion effects of rising fuel prices

The private sector is urging the Government to intervene and adjust excise taxes to reduce the fuel price and negate the harmful impact on Guyana’s economy.  

A joint statement from the Private Sector Commission (PSC), the Guyana Manufacturing and Services Association (GMSA) and the Georgetown Chamber of Commerce and Industry (GCCI) on Friday noted that fuel prices have been constantly increasing over the past few weeks.

It was noted that the manufacturing sector that uses diesel and Bunker C for self-generation of power and steam are finding it difficult to cope with the increased cost as it has a negative impact on profits.

The statement explained that the alternative is to increase the prices of goods produced which is difficult to do in a competitive market.

“As consumers, there are economic implications of higher oil prices. When gasoline prices increase, a larger share of households’ income is likely to be spent on it, which leaves less to be spent on other goods and services,” the joint statement noted.

According to the private sector bodies, as the world market price for oil recovers, it has noted similar increases at retail outlets per litre of gasoline and diesel; from $180 in June 2016 to $230 more recently in July 2018.

“While this is commensurate with the rising price of oil on the world market, there are ways in which our Government could stem the impact of the price increase on the local economy, in order to manage the foreseeable uptick in inflation and reduced economic activity.

“There is much that could be done by adjusting the excise tax so that businesses could remain competitive,” the statement noted.

On the commercial side, the private sector noted that fuel costs account for a significant part of overall operational costs in distribution and transportation businesses.

On June 23, Minister of Finance, Winston Jordan had noted that the Government is considering “creative solutions” to reduce the impact of the high world-market costs.

However, Jordan did not expand on what are some of the solutions being considered or how soon the measures will be implemented.

He had explained that the goal is to develop a mechanism to ensure the rising fuel prices internationally will not have negative effects on Guyana’s balance of payments.