GUINEA-BISSAU- According to a recent announcement by Lassana Fati, Director General of External Affairs at the Ministry of Trade and Industry, Guinea-Bissau is considering terminating the subsidy on rice prices, a staple food in West Africa.
Rice plays a pivotal role in providing caloric intake across both rural and urban areas in Guinea-Bissau, among other West African countries.
Per capita consumption of rice in the country stands among the highest globally, at 100 kilograms per year, significantly surpassing the global average of approximately 57 kilograms, as reported by data from the United States Department of Agriculture (USDA).
Since August 2023, the government has been subsidizing consumer purchase prices for rice on the local market.
This initiative led to a notable reduction in prices, with a 50-kilogram bag of 100% broken rice seeing a decrease of 22% to 17,500 CFA (US$28.5), while the price of a 50-kilogram bag of broken rice dropped by 6.3% to 22,500 CFA (US$36.7).
However, this policy has placed a considerable strain on public finances. According to official figures, the subsidy has already consumed 4 billion CFA francs (approximately US$6.6 million) from the government’s coffers.
“The government can no longer sustain the financial burden imposed by this subsidy, which is straining public finances. The International Monetary Fund had previously cautioned us about the risk of fiscal imbalance associated with this initiative,” explained Fati.
If the decision to eliminate subsidies is finalized, it would likely lead to reduced economic accessibility for the most vulnerable segments of the population.
The potential cessation of the subsidy underscores the government’s efforts to address fiscal concerns and align its policies with broader economic objectives.
However, the move also highlights the delicate balance between fiscal responsibility and ensuring food security for the nation’s populace.
Recently, in a move designed to promote food security in Guinea Bissau, India agreed to dispatch 50,000 tonnes of broken rice, to Guinea-Bissau and Djibouti, as part of humanitarian aid efforts, despite export restrictions.
This decision followed recommendations from the external affairs ministry and was facilitated through the government export body, National Cooperative Exports Ltd.
African nations, especially West Africa, have historically relied on Indian rice imports, with export bans causing disruptions in global markets.
Prime Minister Narendra Modi’s pledge to address inflation has prompted these measures, despite IMF calls to reconsider export bans to mitigate global inflationary pressures.
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