It is the poor that suffer the most when subsidies are lifted

Oct 17, 2019 Letters

DEAR EDITOR,

I have been following with keen interest developments in Ecuador where the Government headed by Lenin Moreno was forced to back off from a decision to cut fuel subsidies. The measure which was dictated by the International Monetary Fund (IMF) proved to be highly unpopular and resulted in a wave of protest actions led by the country’s indigenous people.
The IMF prescription is known to have sparked protest actions in several parts of the world including Guyana during the 1980’s under the then PNC administration which was pressured to implement a range of austerity measures such as ending of government subsidies, reduction of the size of the public service and substantial devaluation of the local currency. One consequence of such measures was an increase in poverty levels and steep increases in the cost of living.
It was not until the PPP/C Government came to power on October 1992 that Guyana exited the IMF programme after the economy became much more consolidated and resilient.
The lesson from the Ecuadorian experience for policy makers is that the masses, especially the poor and the downtrodden must not be taken for granted. It is the poor that suffer the most when subsidies are lifted or when benefits are taken away from them as in the case of the withdrawal of subsidies for water and electricity for pensioners by the current APNU-AFC administration. The same can be said for the imposition of Value-Added Taxes on water and electricity which is hurting the poor much more than those in the high income bracket.
With anticipated higher revenues from oil and gas, subsidies for water and electricity for pensioners and low income earners should be restored by the incoming administration. In addition, subsidies for fuel and gas should also be introduced as in the case of Ecuador. Fuel and gas subsidies impact directly on the quality of life and living conditions of those at the bottom of the income ladder which could go a far way in terms of poverty alleviation.
The price for fuel in Guyana is far too high given the earning levels of the average Guyanese. Now that we are on the verge of becoming an oil producing nation, it is only fair that we benefit from reduced fuel and energy costs which over the years have proven to be a significant millstone over the backs of the working class.

Hydar Ally

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