Belize: Government mitigating impacts of fuel prices

By Rumi Samuel Published on July 08, 2022
Belize: Government mitigating impacts of fuel prices

The Government of Belize reiterates the various steps the Cabinet has taken to cushion increases in the imported cost of fuel products, which has risen substantially due to, among other developments, the war in Ukraine.

It states while the acquisition costs of fuel have increased more than 300 per cent since November 2020.

The government has substantially mitigated that increase by fixing prices on diesel and regular gasoline since March and dramatically reducing import duties on such fuels.

From November 2020 and continued for years before that, an excise tax on diesel and regular gasoline was $2.97 and $3.29 per gallon, respectively. Today, those taxes have been reduced by virtually 100 per cent and 77 per cent, respectively, down to less than one cent and 75 cents per gallon.

Secondly, the government has actively engaged with Puma Belize Ltd., the national fuel importer, to ensure that fuel product prices are the lowest possible.

In addition, as a burden-sharing effort, the government is negotiating for temporary reductions to specific importer and dealer margins to allow the government to accommodate even further increases in acquisition costs at the current fixed prices on diesel and regular gasoline.

Thirdly, the government has expanded its fuel cost relief programs, including critical foreign currency-earning sectors such as sugar and banana, to include tourism operators.

Government is also now subsidising the cost of public transportation. Naturally, as the import duties on fuel products have been reduced for everyone, the relative value to these sectors of these subsidies has dropped in tandem.

Year to date, the value of import duty reductions has totalled almost $9 million. At this rate, by year-end, budget funding from fuel duties will have been reduced by $20 million. This represents a loss to the government of $55,000 per day.

So long as the imported fuel price allows, the government will continue to hold diesel and regular gasoline prices at their current levels despite the revenue losses.

The government states what it is unable to afford is a substantial subsidy of pump prices: that is, for government to underwrite any portion of the import acquisition cost.

Such a step would wreck the budget, put at risk public officers’ salaries and pensions, adversely affect the provision of essential public services, including health, education and social protection, and ultimately defy a debt surge and devaluation.

The government will continue its engagements with stakeholders – consumer groups, the importer, dealers, and others – seeking to keep prices down, encourage efficiency, and support targeted relief for crucial sectors.

Rumi Samuel

Rumi Samuel

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