Cabinet has discussed the increased fuel prices and is considering options carefully to avoid future negative effects on the country’s balance of payments, according to Minister of Finance Winston Jordan.
“The issue about price increases for the minibuses is also engaging the attention of the Cabinet. Only last Tuesday at Cabinet this matter was raised and so we will have to find creative solutions to the problem of rising fuel prices. I understand, though, that in the past week or so prices have trended downwards. I believe prices have fallen back to about sixty-something dollars per barrel from the high seventy-something,” Jordan was quoted as saying yesterday by the Department of Public Information.
The report said he also noted the opposition calls for a previously used tax formula to be employed to ease the burden of increased fuel prices on citizens but explained that while the previous administration was able to forego taxes to maintain fuel prices in the past, the conditions were different.
“They say they had a formula in place where they used to reduce the excise tax so that people used to buy gas at the same price they used to buy before. I’m aware that indeed they had such a formula, but this is not only about whether government will still get the same amount of revenues that they had budgeted. It also has that external side… the side that has to do with finding the foreign currency to buy the same quantity of gas that you were consuming when the prices were low,” Jordan said.
The report added that Jordan had previously said the earlier arrangements were made possible because of favourable conditions of purchase obtained from Venezuela through the now-defunct PetroCaribe agreement.
“How did the last government do it? Well in large measure because they had access to the PetroCaribe arrangement. That arrangement with Venezuela allowed the government to import expensive fuel from Venezuela, but only pay Venezuela a small part of what is owed to them and the rest rolled over into a long-term concessional financing. So, at any one time, the last government didn’t have to face the proposition that we have right now which is we have to find 100 percent of the cost of the fuel and pay for it immediately. When you have an arrangement such as the PetroCaribe it doesn’t affect your balance of payment significantly,” Jordan explained.
