President Jagdeo’s relief package announced on Wednesday will be welcomed by many Guyanese who have been groaning under the weight of the rising cost of living, VAT and other impositions. But is it enough and are there structural weaknesses in the manner in which this ameliorative effort has been presented? The major benefit to the general public will be the plan to keep the price of baked goods at current levels not withstanding the flour price increases that have been announced by Namilco. In this respect the government says it has pursued discussions with 22 pre-approved bakeries which account for 95% of the country’s bakery products for the prices to remain the same and for the government to absorb the increased cost. Whether indeed those statistics will hold up is another matter. In the remote parts of this country and in which areas the indigent are too distant for their voices to be heard can the government be assured that its relief will also be felt there? Moreover, is the government in a position to rigidly monitor the pre-approved bakeries up and down the coast to ensure there is no profiteering or is this task the sole purview of the harried consumers?
In the launching of VAT in 2007, it had been argued that the government had badly missed the opportunity to assist consumers by having the stats bureau or the GRA do intensive data gathering to ensure that in the application of the 16% tax consumers were not being ripped off wittingly or unwittingly by businesses. In many cases initially, sixteen percent was simply added on to prices and this helped to pump up the inflation rate. Monitoring of the market is something that consumer organizations should do but unfortunately it is not the case here.
The government is also commendably making available 200,000 1-kg sacks of flour available at the old price. The flour relief measures will cost $200M and it is hoped that in time that wheat prices will retreat though there can be no certainty about this.
Public servants will benefit in two other ways right away: a 5% wage hike effective January 1, 2008 and for those still earning below $50,000 there will be a temporary non-taxable payment of $4,000 per month until year’s end. Given the significant difference between inflation for 2007 and the public service payout and the swingeing hike in the cost of living this year, 5% will hardly be considered as adequate.
From its $4,000 top up it seems that the government believes that $50,000 per month should be considered as the living wage though a contemporary basket of goods for the average family would expose this as inadequate. The Bureau of Statistics remains shockingly silent on the monthly consumer price index despite the absolute importance of this data to all types of planning and planners including the housewife. Yet, it now expects businesses to provide it with information in the economic survey it is publicizing widely. Isn’t there a contradiction here?
The government did not live up to the widely held expectation that wage increases for 2007 would approximate to inflation so that there would be no loss in purchasing power. As an aside, it is also worthy of note that despite promises by the PPP/C administration for many years now there is still no wages policy defining the parameters of public service pay.
The distribution of 600,000 packets of vegetable seeds is commendable. How many of them will find fertile soil is a big question but Guyanese must take responsibility for helping themselves to rise above the cost of living pressure and a small kitchen garden will help no end.
Despite all that the government has announced in this relief effort, there are two major areas where citizens can rightly challenge its commitment to reducing the cost of living. The first is energy alternatives. With the oil price gushing through ceiling after ceiling the government is yet to deliver on its promise of cheaper and cleaner alternative energy. Amaila Falls has become a watchword for drift, pie-in-the-sky and bridges too far. When it happens and hydroelectricity enters the mix, benefits will flow to the economy. That Amaila Falls has been so long on the agenda without bearing fruit is reflective of two major concerns: the attractiveness of the country to large, high-risk investment and the ability of our governors to change the landscape in a revolutionary manner. Solar energy is minimally in use, wind power is limp and biofuel in commercial quantities is still some way away.
Secondly, on the agricultural front, despite the oft-talked about potential there has not been nearly enough done either in enabling the country to take advantage of the now-improved markets or to stimulate local production of the scale and variety that would diminish reliance on imported foods and the inflation they come with.
The potential of the intermediate savannahs whether it’s jatropha or zucchini remains unfulfilled and the absence of new large-scale farms exemplifies the difficulty the sector faces. Not even Trinidad appears willing to take the plunge here as it is now clearing its own land for large farms and rice cultivation.
Considering the huge VAT windfall gathered by the government for 2007, the relief programme does not compare favourably. The package will undoubtedly ease the pain but as demonstrated in the recent debate between candidates Clinton and Obama on the gas tax, hard-hit consumers are looking for visionary leadership and not short-term measures for political comfort.
