Government absorbs global cost shocks as Guyana maintains economic expansion

Despite sharp increases in global energy, transportation, and production costs, the government has continued to absorb major price shocks rather than passing them on to consumers, as Guyana sustains economic growth while investing in measures to protect households and strengthen the productive sector.

President Dr Mohamed Irfaan Ali, speaking during an interview on the 2026 Mid-Year Report, said Guyana’s economic performance must be viewed against a challenging international environment marked by geopolitical conflicts, disrupted supply chains, extreme weather, and rising input costs.

Guyana, he explained, remains exposed to these global developments because much of what is consumed locally is still imported, including refined petroleum products and agricultural inputs.

“We are not an isolated case. We do not exist in a hemisphere by ourselves. We are part of a global system,” President Ali said, noting that conflicts and disruptions to maritime and aviation routes have driven up transportation, logistics, and insurance costs, while also increasing the price of goods and services.

Those pressures have been significant for the energy sector.

According to President Ali, GPL’s diesel costs have increased substantially since the beginning of the year, but the increase has not been transferred to consumers.

“As a government, we have not passed on a cent of this increase to the consumer,” he said, adding that GWI is similarly absorbing higher energy-related operating costs without passing those increases on to customers.

The decision comes at a high fiscal cost. The government is also foregoing revenue from fuel excise taxes while continuing to finance subsidies and essential public services.

President Ali said these measures show how the government is using available fiscal space to cushion households from external shocks, even as it faces increased costs across virtually every area of the economy.

“The government continues to subsidise and absorb these shocks,” he said, explaining that higher oil and gas revenues have been accompanied by increased requirements for subsidies, energy, water and other measures designed to mitigate the effects of global price increases.

At the same time, the government is maintaining spending on programmes that directly affect household welfare, including regional health services, specialised medical care, transportation support for children, increased old age pensions, salaries, the Because We Care programme and community infrastructure.

President Ali said the challenge is not simply to manage the immediate effects of global instability but to use current investments to create greater resilience and earning opportunities for Guyanese households.

This includes major projects such as the Gas-to-Energy initiative, which he said is expected to reduce energy costs by 50 per cent, as well as investments in manufacturing, agro-processing, industrial development, farm-to-market roads and agricultural production.

The strategy also extends to food security, with the government seeking to increase domestic production and establish greater buffers against international supply disruptions.

Farmers’ markets are to be expanded across the country, while production is being encouraged in commodities including onions, potatoes, beans and soya. The poultry sector is also being strengthened through local production of hatching eggs and increased storage capacity.

President Ali said maintaining sufficient reserves is critical to preventing temporary supply shortages from translating into sharp price increases.

“It’s not only investing in more production of chicken but also in the storage facility so that we can always have excess production and enough storage for excess production to create a buffer to maintain supply but also to maintain price stability in the market,” he explained.

While these interventions will address immediate pressures, President Ali said the government is simultaneously laying the groundwork for another phase of economic expansion.

The second half of the year, he said, will require continued focus on diversification, productivity and expanding sectors such as financial services, tourism and agriculture, while preparing the country for increased economic activity once energy costs fall.

The expected reduction in energy costs is also being linked to increased investment and demand across the economy, including housing, banking, manufacturing, mining and construction.

The overarching objective, he said, is to ensure that economic growth translates into broader diversification, investment and opportunities for households.

“All of these things will add to a trajectory that will see continued growth, but more importantly, more diversification and more investment, more structured investment in the new transformative projects that would drive economic transformation and human transformation,” President Ali said.

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