IMF recommends consumers pay real prices for commodities; urges social safety system

Last Updated on Tuesday, 27 September 2022, 22:59 by Denis Chabrol

As Guyanese continue to be faced with high prices of goods and services, the International Monetary Fund (IMF) on Tuesday recommended that the Guyana government gradually reverse tax reductions and allow Guyanese to pay the real prices for goods and services.

“Since tax measures are poorly targeted tools, staff recommended 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, and therefore other forms of government support are more appropriate,” the IMF said in its Article IV Staff Report on bilateral discussions that were held with the Guyana government.

Guyana earlier this year removed the excise tax on fossil fuels – gasoline and diesel- in an effort to cushion the impact of spiraling oil prices as a result of Russia-Ukraine war.

The 190- member nation financial institution, which pushes for sustainable growth and prosperity, also asked Guyana to develop a social safety net system that would target intended beneficiaries. ” A gradual unwinding of these untargeted measures and strengthening and better targeting the social safety net system are recommended to better mitigate the impact of the inflationary shock,” the IMF said.

According that international financial body that manages the economic performance of member nations, the scrapping of tax breaks should be done at the same time measures are put in place to further develop and strengthen a well-targeted social safety net system.

Government has delivered billions of dollars to Guyanese in the form of grants for COVID-19, school-age children, flood relief for farmers, house construction supplies, disabled children, and women entrepreneurial projects.