Prime Minister Godwin Friday, on Wednesday, unveiled a package of tax reductions, freight reforms, and agricultural support measures aimed at slowing increases in food prices, as global fuel and shipping costs continue to push up the cost of imports and local production.
In a national address on the country’s economic situation and cost-of-living pressures, Friday, who is also the minister of finance, economic planning, and private sector development, said his administration was intervening across the fuel, freight, electricity, and agricultural sectors to “cushion the blow for the average family” and protect the nation’s food budget.
“We understand that while we fix the big picture, you are still feeling squeezed,” Friday said six months to the day that his New Democratic Party was elected to office.
“Responsible leadership means balancing the books while protecting the… necessary social programmes. That is why we are committed to the measures to reduce the high cost of living for households and to ease the pain on our people.”
He said the government’s interventions were designed to prevent imported inflation and higher operating costs from fully passing through to supermarket shelves and food vendors.
Fuel and electricity: slowing the pass-through to food prices
The prime minister linked food prices directly to global oil markets and domestic fuel costs, noting that higher pump prices and rising electricity costs feed into the costs of transport, refrigeration, and production.
Between January and May, he said, the international benchmark Brent crude oil price rose by 68%, from about US$64.50 to over US$108 per barrel.
“For a small island developing state that depends on imported fuel, those price increases reach us quickly, and they affect us directly,” he said.
Cooking gas: protecting the family meal
The prime minister singled out cooking gas as one of the most personal components of the cost of living.
“There is perhaps no issue more personal to a family than the cost of preparing a meal,” he said.
“Cooking gas is not a luxury; it is a necessity,” he said in the address from the ground floor of the Administrative Complex, the five-story building in Kingstown where his office is on the fourth floor.
During the address, Friday was flanked by his minister of education, Phillips Jackson and Lavern King, with the other members of the cabinet and other senior public servants present.
He said that since January, the international benchmark price for liquefied petroleum gas (LPG) has increased from around US$0.70 to over US$0.90 per gallon — a 27% rise in four months.
Without government action, these increases would drive up the local price of LPG, affecting both households and food businesses:
At the current prices, households pay about EC$40.30 for a 20‑pound cylinder while commercial users such as bakeries and restaurants pay around EC$192.40 for a 100‑pound tank.
“When those costs rise, food prices rise too,” Friday said.
To prevent that, the government is removing the customs service charge on all LPG for 90 days.
“By removing this tax entirely, the government of St. Vincent and the Grenadines will absorb approximately $504,368 in lost revenue over the period of the 90 days of these measures,” the prime minister said.
“Again, this is money we believe is better left in your hands and in your homes to help you ride out this new crisis.”
He said the LPG measure serves both households and food businesses.
“For households, this measure helps stabilise cooking gas prices and protects the grocery budget,” he said.
“And for restaurants, cook shops, caterers, vendors, and small food businesses, it helps maintain affordable meal prices for working people across this country.”
Friday pledged that his government would continue to monitor international markets but insisted that “our position is clear: we will protect the dinner table of Vincentian families”.
Freight and import taxes: cutting hidden costs on supermarket shelves
Friday also pointed to soaring freight charges as a major driver of imported food inflation.
He said that earlier this year, shipping a standard 20‑foot container with essential goods from the United States to Kingstown cost between $2,200 and $3,000, but now that same container can cost $3,300 to $4,800.
Under the current system, taxes are charged not only on the value of the goods, but also on freight — including surcharges added by shipping companies.
“In other words, when shipping companies raise prices, the taxes paid by importers rise automatically as well. That cost eventually reaches the supermarket shelf, and therefore consumers.”
To decouple domestic taxation from global logistics volatility, the government will introduce two key changes, the prime minister said.
The government will remove shippers’ surcharges — including fuel and congestion fees — from the tax calculation; and benchmark freight rates used for tax purposes to January 2026 levels.
In this way, even if a shipping company charges, for example, $4,800 for a container today, taxes will be calculated “as if the freight rates were still at January levels.”
“This intervention will lower the landing cost of imported goods, reduce imported inflation, and help businesses avoid passing on every international price increase directly to consumers,” Friday said.
He presented the freight reforms as a structural move to prevent a constant ratcheting up of food prices every time fuel and shipping rates spike.
Boosting local production to reduce import dependence
Alongside tax and freight measures, the government is also turning to domestic agriculture as a buffer against imported food price shocks.
“We are also focused on long-term resilience,” Friday said, as he outlined support for local farmers.
He announced that the government will provide subsidised seeds and offer a 50% discount on fertilisers to local farmers.
The aim is to increase local food production and reduce the country’s reliance on imported food, which is vulnerable to global price swings, the prime minister said.
The Prime Minister also said the government is monitoring construction costs — including cement — and signalled that, if prices cross a “critical threshold,” the administration is prepared to introduce a VAT waiver on cement “to protect jobs and housing projects”.
Ensuring savings reach consumers
The prime minister acknowledged that fiscal concessions alone would not guarantee lower food bills, and said the government would monitor prices to ensure that benefits are passed on.
“I have directed the National Cost of Living Task Force to monitor prices weekly to ensure that tax reductions actually benefit the consumers, because relief must reach the people, not simply improve business profit margins,” he said.
Balancing fiscal pressures with food security
The prime minister’s announcements came against the backdrop of what he described as a “sobering economic reality” inherited by his administration.
These include a debt‑to‑GDP ratio of 113% in 2025 and an overdraft that “exceeded $200 million, more than double what the law provides”.
Friday said that despite these constraints, the government had chosen to forgo revenue in the short term to protect households.
“My government understands that many Vincentians are anxious about the future,” he said. “But I want you to know this: we are not powerless in the face of global challenges, and you will not face these challenges alone.
He described the package of measures — from fuel tax cuts to LPG concessions, freight reforms and farm support — as “a fiscally responsible shield against extraordinary global pressures,” particularly aimed at protecting the dinner table.
“Together we will move from pressure to progress, from uncertainty to stability, and from rescue to resilience,” the prime minister said.