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By Mark DaCosta- One of the major issues currently facing Guyanese consumers is the cost of living. Prices of goods and services are spiralling out of the reach of many citizens. Persons have reported via social media and by other means that they have had to take drastic measures to make ends meet. Some Guyanese can now afford to eat only one, cheap meal per day. Others have stopped using fruits and vegetables because those foods are simply too expensive. Obviously, such practices would have a negative impact on health.
Perhaps, more frightening, is another austerity practice of which this publication is aware. It has come to the attention of Village Voice News that two specific Guyanese have reduced the amount of essential medication to less than what is prescribed by their respective doctors because those medications have to be bought by the patients, and they are expensive.
One Guyanese reported that she now uses her eye-drops for Glaucoma only once per day instead of three times as is prescribed. She said that she knows that she is risking her sight, but she has no choice. Another person has said that he cuts one of his expensive pills in half and uses one half in the morning and the other half in the evening; his prescription instructs that he use a whole pill twice daily. That man is fighting cancer. Both of those patients said that they are cutting back in almost every aspect of their lives. There can be no doubt that many other unknown Guyanese are also skimping on essential medications; some persons may not be able to obtain any medications owing to the expense.
A report in the Guyana, South America (GSA) News states, “Against the backdrop of a booming oil industry and a meagre 7% increase in the minimum wage, the cost of everyday items in Guyana, South America has increased an estimated 20 per cent over the last year – sparking fears that Guyana may be on the verge of suffering from the resource curse instead of reaping the benefits of much anticipated positive economic transformation. To illustrate the phenomenon, here are just a few examples.
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“Joining the bandwagon is a sudden spike in the inflation of Guyana’s currency against the US dollar.” Additionally, according to a July report by the Bank of Guyana, the cost of living is likely to double by the end of the year.
So, what is the People’s Progressive Party (PPP) government doing? One will recall what Minister of Legal Affairs Anil Nandlall said in March of this year regarding price regulation in the rice production sector. The minister said, “The government can’t regulate the price that the millers, for example, purchase the paddy at, unless the government is to impose price tariffs [and]…a pricing regime, and we don’t wish to do that as a government.” Other PPP officials have echoed the policy that government will not intervene. Although there has been some acknowledgement by the regime of the financial burden facing Guyanese, nothing tangible is being done to control prices.
While the PPP has argued against price controls, many economists have said that price controls are sometimes necessary and beneficial. The publication “ECONOMICS” states, [Fixing] maximum prices can reduce the price of food to make it more affordable.
The Publication makes the following points:
- When inflation is increasing, the monetary authorities can set a legal price limit on the amount prices can rise. In theory, this will limit price increases and keep inflation under control without resorting to higher interest rates.
- If prices are rising due to bigger profit margins (e.g. firms have monopoly power) then setting limits on price increases can ensure prices don’t rise, without causing a shortage of goods.
- If prices are increasing and supply is inelastic, then price controls should not affect supply. E.g., if the supply of housing is fixed, rent controls can reduce prices without reducing supply.
- In times of war and rationing, price controls aim to stop firms profiting from the shortage and keeping prices affordable for all consumers, otherwise, the price of limited goods, such as food will skyrocket with many consumers being unable to afford them.
- Price controls don’t have to be for all goods, but can be focused on those which are considered essential, e.g., food, rent.
- Price controls are best used for a specific time period, e.g., when there is pent-up demand and supply chain shortages. For example, at the end of a war or in 2022 at the end of the COVID-19 pandemic.
While the high officials of the PPP do not have to worry about rising prices while they luxuriate in their government mansions; while the regime’s elite don’t have to skimp on their food and medications; other ordinary Guyanese are left to suffer. Such is the state of Guyana under the rule of the PPP.