MINISTER of Finance, Dr. Ashni Singh, yesterday announced a 10 per cent reduction of the excise tax on gasoline from 17 per cent to 7 per cent.

He said this intervention by Government is part of a committed effort aimed at cushioning the impact of spiralling fuel prices.

A statement from the Government Information Agency (GINA) noted that over the last year, the acquisition cost for diesel and gasoline has been steadily increasing.

In January 2007, gasoline was imported into Guyana at US$58.83 a barrel and in 2008 the cost skyrocketed to US$109.55 per barrel which represented an increase of 86.2 percent.

Minister Singh said this most recent reduction is in light of the alarming developments in recent days which saw crude oil being traded at prices above US$125 per barrel, while the most recent shipment of diesel imported into Guyana was purchased at the unprecedented price of US$150.85 per barrel.

As increasing fuel prices contribute to the worldwide phenomenon of rising food prices which has affected the cost of local commodities in many territories, government continues to implement measures to lessen the impact on consumers.

From the inception of this global issue, the Government of Guyana has put several measures in place.

There has been a progressive reduction of the Excise Tax on fuel from 50 per cent on gasoline at the start of 2007 to 17 per cent, and now to 7 per cent. There was also the reduction of the tax on diesel from 10 per cent to zero per cent at the beginning of last year. Additionally, there is no taxation or duty on kerosene.

In January 2007 when the Valued Added Tax (VAT) was implemented, numerous food items were zero-rated. In the 2008 National Budget, government zero-rated another long list of items including wheaten flour with effect from March 1.

And just last week, the Inter-American Institute for Cooperation on Agriculture (IICA) Representative assigned to CARICOM, Dr. Vincent Little, said Guyana’s interventions to address the rise in food prices has been the best in the region.

He made the pronouncement during a presentation on ‘Perspectives on the Regional Food Situation and the Jagdeo Initiative’ in Georgetown.

The occasion was the IICA’s annual accountability seminar where Little pointed out that the region’s food crisis is due to a number of complex simultaneous challenges, such as globalisation and trade liberalisation, climate change and escalating oil and energy prices.

These occurrences raised concerns on the food and nutrition situation of the region’s poor and inflation and has already caused social unrest in some countries, he said.

The IICA expert disclosed that the problem is not temporary and is likely to result in a trade off between food and energy security.

Little lauded the most recent measures implemented by the local Administration to arrest the position, including a five per cent increase in pay for Government workers, retroactive to last January; an additional $4,000 tax free allowance for those earning below $50,000 monthly; the selling of 200,000 packets of flour weighing one kilogramme each at a reduced price; and the distribution of $20M worth of seeds, fertilisers and pesticides to increase food production.

In addition, in order to stimulate a medium term supply response, a ‘Grow More’ campaign has been initiated countrywide.

Little said those interventions will ensure macro-economic stability but suggested a temporary budget may be required to adequately address the issue.

Touching on the Jagdeo Initiative, he said the region has been in a state of repeated crises, due to vulnerabilities in severe adverse weather conditions, trade, domestic policies and institutional differences.

He said, too, that some symptoms of the problem can be linked to the region’s poor track record in implementing policies and plans, agriculture buckling under pressure from trade reforms, national disasters, policy differences and the inability of the region’s agriculture system to ensure food security and reduce its growing import food bill.

Little argued that a different approach is needed in the context of new, changing international development and environmental conditions.

However, he acknowledged that CARICOM Heads of Government have undertaken efforts to reposition agriculture, both in their own rights and as part of the CARICOM Single Market Economy (CSME).

The Jagdeo Initiative envisioned that the following goals will be met by 2015:

* agriculture will make a substantial contribution to economic and social development;

* there will be a transparent regulatory framework at the national and regional level that attracts and facilitates overall investment;

* there will be significant transformation in processes and products, as well as stimulation of innovativeness and entrepreneurship and

* the region will achieve an acceptable and stable level of food security.

Some of the Government’s earlier interventions to help citizens deal with the current food price situation included the removal of the Value Added Tax (VAT) on basic food items, zero-rating the Excise Tax on diesel, and reducing the price on gasoline.