Guyana defies global trend, maintains cost-of-living relief in Budget 2026
While many countries are reducing government spending, the Dr Mohamed Irfaan Ali-led Administration is going against this trend by maintaining and increasing its cost-of-living support measures in Budget 2026.
During a live broadcast to review this year’s fiscal package, President Dr Mohamed Irfaan Ali said his government’s focus since returning to office has always been to address the cost-of-living pressures on ordinary families, specifically the cost of food, fuel, electricity, and housing.
“Ninety-five per cent of budgets globally are cutting back on measures…like we would have introduced in Guyana. We are continuing the financing of those measures while at the same time we build out new measures to create wealth, expand more opportunity and build stronger families,” Dr Ali stated on Wednesday.
He explained that Guyana has maintained zero-rated value-added tax (VAT) on key food items and household necessities since Budget 2021, while also removing VAT on fertilisers, agrochemicals, pesticides, and machinery used in farming.
This, he said, directly reduces the cost of production for farmers and helps to keep prices for food items low. Budget 2026 is continuing on this path, building on measures to address inflationary pressures through fiscal support and local production.
One of the cost-of-living measures cited as being sustained was the continued removal of excise duty on gasoline and diesel fuel, which the president asserted has saved the public hundreds of billions of dollars annually.
In addition, the government will sustain the subsidies on freight costs to ensure prices of imported food and other essential items remain at the same level. These measures alone have saved consumers close to $20 billion and will continue in Budget 2026.
The prices of electricity and water will also remain the same, with the government sustaining subsidies on these services.
President Ali recalled that the VAT previously imposed on electricity and water, as well as on medical supplies, has been removed, costing the government billions of dollars every year.
“We have not increased electricity and water tariffs,” he said, adding that these subsidies represent expenditures “we are taking away from the ordinary Guyanese family.”
According to the president, Guyana’s inflation performance is evidence that its cost-of-living strategy is working. He said the country currently records the lowest inflation rate in Latin America and the Caribbean, and among the lowest globally, attributing this to prudent economic management and targeted interventions.
The administration is addressing inflation by investing in agriculture and irrigation infrastructure, creating new farmland, and boosting local food production to help lower prices.
According to the president, Budget 2026 is about maintaining relief as well as creating opportunities for income growth and wealth creation, noting that the government continues to finance housing subsidies, mortgage relief, social grants, pension increases, and tax-free bonuses.
The Guyanese leader described Budget 2026 as a continuation of the People’s Progressive Party/Civic Government’s philosophy of using fiscal policy to protect citizens, stabilise prices and build stronger families.
“I want to say that today Budget 2026 will continue in this tradition of the PPP/C Government to finance issues that would ensure price stability for food… reduce the cost of local production… and improve our competitiveness for small [and] medium enterprises,” he said.