Guyana’s economy is tipped to perform extremely well, and ride through the COVID-19 pandemic in better shape than practically any other economy on the planet, according to Chief Economist for Smith’s Research & Gradings, Scott B. MacDonald.
MacDonald, who is also a Senior Associate at the Center for Strategic & International Studies (CSIS) and a Research Fellow at Global Americans, noted that Guyana is no longer “the isolated country on the northeastern shoulder of South America it once was”.
“The combination of massive oil discoveries; improved global communications; and a better-connected diaspora in North America, the United Kingdom and the Caribbean means that Guyana is no longer on the outskirts of the global economy,” the expert wrote in an opinion piece published recently by Caribbean News Global.
He outlined that Guyana, now being considered one of the most promising oil producers in the Region, has managed to attract large multinational companies, including US’ ExxonMobil and Hess, Spain’s Repsol, and China’s CNOOC.
He pointed out that in 2020, Guyana’s economic growth is expected to be a little over 50 percent, which he said, “even in normal times would be amazing”. He noted, however, that this rate has been revised downward to 26 percent as a result of the COVID economic downturn.
MacDonald highlighted that Guyana, one of the poorest countries in the Americas, was long due for some good luck, which finally came with massive offshore discoveries of oil.
Noting that Guyana’s good luck on the economic front should continue into 2021, he observed that the country has challenges which it needs to address if it wants to achieve a longer term and equitable trajectory of expansion.
“Prudent management of the nation’s resources will give Guyana an opportunity for a far better future, something that has to be carefully weighed against the corruption and uneven development of other oil-based economies, such as Nigeria, Equatorial Guinea and Venezuela,” he stated.
MacDonald expressed that one of the major challenges facing the country is governance. This, he explains, comes at a number of levels, “starting with the messy nature of the country’s electoral politics”.
“The last election cycle commenced with a vote of no confidence in late December 2018, which was challenged by the standing government. Contesting the legitimacy of the no confidence vote dragged on through 2019 (complete with the involvement of the Caribbean Court of Justice), finally ending with national elections in March 2020. Even then, the results were held up through August, with the outgoing government finally agreeing to bow out (though the losing party still fights the results in court)”.
On this basis, he suggests that considering the convoluted nature of the 2020 elections, the electoral process needs a review and overhaul, “but it must be done with sensitivity to the country’s ethnic mix”.
The expert further detailed the need for an overhaul of the judicial system to reflect the changes coming into Guyanese economic life and society, and to improve the regulatory system so that it is friendlier to both local and foreign businesses, which could help facilitate greater investment, including the non-oil sectors of the economy.
Importantly too, MacDonald underlined the need for an upgrade in the country’s infrastructure. He pointed to an Inter-American Development Bank report in 2019 which stated: “The infrastructure stock is inadequate to support delivery of public services or facilitate private sector growth. The country’s transportation infrastructure (roads, airports and seaports) requires substantial improvements to support the growth of the private sector.”
He observed that the high energy costs, dependability of electricity and upgrading the country’s telecommunications system also need attention.
Another area he outlined is the improvement of the country’s human capital. He explained that although efforts have been made to improve the education system, the new oil-based economy is creating demand for everything, from skilled welders to accountants and engineers.