Ministry of Finance 2026 Cost of Living Assistance Programme

Measure 1 Cost of Living Assistance Programme. Image: Ministry of Finance

Measure 1: Removal of VAT on electricity

The government will temporarily remove the Value Added Tax (VAT) on electricity consumption for all categories of consumers from August through December 2026.

This means that every electricity customer will benefit, including:

• residential households
• small commercial businesses
• large commercial customers
• industrial consumers
• public institutions
• all other electricity users

Electricity is a key input throughout our economy. Reducing VAT on electricity lowers costs across households, businesses and productive sectors, helping to ease inflationary pressures more broadly.

Electricity is a vital input throughout our entire economy. When energy costs rise, they impact everything from family budgets to local business operations. Under the Government’s Cost of Living Assistance Programme 2026, we are implementing a 100% removal of VAT on electricity bills from 1 August through 31 December 2026.

What can you expect

Remember this change takes effect from 1 August. When you receive your August Bill, the Government Charges section, which displays VAT will reflect a zero charge.

Who does this benefit?

• Removing VAT lowers operating and living costs across the board
• Households: Immediate tax savings directly on your monthly electricity bill
• Businesses and Entrepreneurs: Lower overhead expenses, helping small businesses keep operating costs stable
• Productive Sectors: Support for agriculture, manufacturing, and commerce to help ease broader inflationary pressure for everyone

Measure 2 Cost of Living Assistance Programme. Image: Ministry of Finance

Measure 2: Removal of Customs Service Charge on fuel for electricity generation

The government will temporarily remove the Customs Service Charge applicable to imported diesel used for electricity generation. This measure is designed to help moderate electricity generation costs and reduce the upward pressure on electricity tariffs arising from higher international fuel prices. Although applied to imported fuel used for generation, the benefits extend to all electricity consumers, because reducing fuel-related costs helps lessen the overall impact of rising fuel prices on electricity tariffs across the economy. The full impact of this measure will be felt gradually by consumers, given the current calculation methodology and billing cycle arrangements.

100% removal of Customs Service Charge on fuel

Because Grenada imports the fuel used to generate our electricity, importation taxes directly impact the price of power for every household and business. Under the Cost of Living Assistance Programme 2026, the Government of Grenada is implementing a 100% reduction in the Customs Service Charge on imported fuel for electricity generation from 1 August to 31 December 2026.

How does this impact your household?

By eliminating this tax at the point of import, the Government is directly reducing the raw cost of generating electricity, helping to drive down the overall electricity fuel charge for ALL consumers.

What to expect on your bill

Your bill will not magically change all at once. This relief will translate gradually into lower energy costs as new, tax-free fuel shipments enter the generation supply.

Measure 3 Cost of Living Assistance Programme. Image: Ministry of Finance

Measure 3: Enhanced electricity subsidy 

The government will significantly expand the existing electricity subsidy programme by increasing the monthly subsidy from EC$10 to EC$50 and expanding eligibility from households consuming up to 99 kilowatt-hours (kWh) per month to those consuming up to 200 kilowatt-hours (kWh) per month. The previous subsidy programme provided support to approximately 22,089 households and formed an important part of the government‘s response to rising living costs.

The enhanced programme will now extend meaningful assistance to approximately 38,640 households, representing a substantial increase in both the value of the benefit and the number of families receiving support.

This measure reflects the government‘s recognition that the current cost-of-living challenges require a stronger response. By directly reducing monthly electricity bills, the enhanced subsidy will help cushion households from higher energy costs, protect disposable incomes and provide tangible relief to families affected by rising prices.

Like the other measures being announced today, this intervention is temporary, targeted and fiscally responsible, providing immediate support to households while the government continues to advance longer-term solutions in renewable energy, energy efficiency and economic resilience.

Data drives our decision-making. While the previous fuel subsidy provided relief for users consuming up to 99 kWh of electricity, rising global energy costs have created added pressure on even more household budgets across our nation.

By expanding the usage threshold to 200 kWh, thousands more households become eligible. By increasing the subsidy to $50, real savings are returned directly into the pockets of citizens across Grenada, Carriacou, and Petite Martinique.

So, what can you expect?

• Duration: 1 August to 31 December 2026
• The Benefit: If your household uses 200 kWh or less of electricity per month, you will receive $50 OFF your monthly electricity bill
• Reminder: This will affect your bill issued at the end of August 2026

That’s extra money back in your pocket for groceries, school supplies, and everyday family needs. We expect over 38,000 households to benefit from this initiative!

Measure 4:  Two VAT-free shopping days

As part of the government‘s Cost of Living Assistance Programme, Cabinet has approved the introduction of 2 VAT-Free Shopping Days per month during August, September and October 2026. This initiative is intended to provide direct and immediate savings to consumers while supporting business activity and stimulating economic growth.

Under the programme, approved VAT-registered and tax-compliant businesses will be permitted to sell eligible goods free of VAT during designated shopping periods. Consumers will be able to purchase a wide range of everyday items, including groceries, clothing, household goods, appliances, electronics, school supplies and hardware items, without paying VAT, resulting in meaningful savings for families.

The policy has 4 main objectives:

• To provide temporary cost-of-living relief to households
• To increase consumer spending and retail sales
• To support compliant businesses and economic activity
• To strengthen collaboration between Government and the private sector while encouraging tax compliance
• The programme has been designed to ensure that consumers receive the full benefit of the VAT relief through clear pricing requirements and compliance measures. It is expected to generate direct household savings, boost commercial activity, and provide additional support to families during a period of elevated prices and economic uncertainty

In essence, the VAT-Free Shopping Days initiative allows households to stretch their dollars further while providing a timely stimulus to the economy, making it a key component of the government‘s broader strategy to cushion the impact of rising living costs.

The Ministry of Finance will roll out a comprehensive PR campaign on this initiative in the coming days.

First VAT-free shopping days: 28–29 August 2026

The Government of Grenada expects to invest up to $18 million in relief measures for citizens across Grenada, Carriacou, and Petite Martinique. As part of the Cost of Living Assistance Programme, you will enjoy 2 VAT-Free Shopping Days per month from August through to October.

The first 2 VAT-free shopping days are set for Friday, 28 August and Saturday, 29 August 2026, just in time for back-to-school preparations and stocking up on household essentials!

What items qualify?

• Groceries and essential food items
• School supplies, books and uniforms/clothing
• Household goods, appliances, electronics and hardware

Save money on key items while supporting local tax-compliant businesses.

Fuel Stabilisation Measures

The government will continue the existing fuel price stabilisation measures, including maintaining caps on gasoline, diesel and kerosene (for domestic consumption) at EC$17 per gallon, maintaining the EC$40 price for the 20-pound LPG cylinder and a cap of EC$350 for the 100-pound cylinder through December 2026.

Closing

The government remains firmly committed to sound public financial management. The estimated fiscal impact of this entire package — including the enhanced electricity subsidy, VAT relief, Customs Service Charge reduction, VAT-free shopping days and continuation of the fuel caps — is expected not to exceed EC$18 million.

This represents a carefully targeted investment in protecting households and supporting economic stability during a period of exceptional external uncertainty.

Government has created the fiscal space to respond because of prudent financial management over recent years. We can therefore provide meaningful relief today while preserving the country‘s long-term fiscal sustainability. That is responsible governance.

Source: Ministry of Finance Facebook

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