…at our Oil Money
We’ve been hearing so much about us becoming a modern-day El Dorado – this time from the “Black Gold” of oil off our Atlantic shore – that Guyanese may be forgiven for asking “where’s the money?!” Attention up to now has been on the rotten deal the PNC’s Trotman (yes…PNC!) brought back from Texas – giving us a measly 14.5 per cent of the revenues. But even though an inquiry should’ve been conducted on what went down in Texas between Trotty and the Majors, the fella has been allowed to get away scot free.
So, evidently going by the principle of letting sleeping dogs lie – or accepting that discretion is the better part of valour – the PPP Government has clearly decided to take the bird in the hand rather than pursuing the two in the bush! (Need any more old chestnuts? Thought not!) At this time two years after the first oil strike, our “bird” amounts to US$345 million or a cool GY$74 billion. For comparison, we exported rice during the same period amounting to US$470 million or GY$95 billion!
But before we dismiss the oil revenue stash as small potatoes, let’s not forget that we’ve actually been producing oil for a year now and the volume is gonna be ramped up six times the present 120,000 bpd. That’ll be real money! In a way, this is good news, since it gives us some time to sort out exactly how we’re going to spend the money. After all, other countries before us have faced this situation of having sudden injections of revenues – so we can be guided by their experience.
We’ve all been educated about the dreaded “Dutch Disease” that can strike when we allow the massive revenues to enter the economy directly. This disincentive struggling with the traditional low-profit-but-steady industries leading to their demise. And when the oil runs out, the country is left high and dry! The other example from those countries – starting with the Mid East oil producers – was establishing “Sovereign Wealth Funds”. The country acts like wealthy individuals and places its revenues into funds established in the developed countries to be invested and generate interest and returns.
The money from the SWFs can then be brought into the local economy in a controlled fashion by investing into industries to diversify the economic base through budgetary support. The funds can also be held for future (inter-generational) needs. Because we’re blessed with so many natural resources like gold, etc, aside from oil, the PNC had dubbed our SWF a “Natural Resource Fund” (NRF) and placed the funds into an account with the NY Fed.
The World Bank’s now asking why the Govt isn’t using the NRF funds.
…at spending oil money
That question shows that the PPP just can’t please some people all the time. Normally Governments are criticised for spending beyond their means, and the World Bank has to be called in to bail them out. But now the World Bank thinks the PPP is too tardy in spending? Man bites dog!!
The PPP has pointed out, however, that the NRF was established in their absence when they’d boycotted Parliament after the PNC had refused to demit office following the NCM. They now want to do the right thing by rescinding the PNC-unilaterally created NRF and passing a new one that will be debated in the National Assembly with the PNC.
Commendably, they’re looking to ensure there will be transparency in spending from the NRF. But they’ve already signalled that they’ll be focusing on improving our Stone-Age infrastructure, which is critical to attracting businesses to really take advantage of getting to our resources.
So, let’s be patient…the money ain’t going nowhere!
…on fighting COVID-19
Your Eyewitness has been pushing the Govt to be more proactive in fighting the war against the COVID-19 pandemic. While he’s sometimes been critical, he must commend the latest “Drive through” Vaccination initiative.
Way to go!