New Govt must focus on diversifying economy to avoid oil-dependency – experts

Dr Remi Piet and Arthur Deakin

The new Guyana Government should place much focus on diversifying the economy even as it seeks to capitalise on the country’s oil-rich resources.

Dr Remi Piet, a Senior Director at Americas Market Intelligence/Africa Market Intelligence; and Arthur Deakin, a respected analyst at Africa Market Intelligence made this observation in an opinion piece published by Caribbean News Global.

The experts posited that Guyanese citizens have waited a very long time for the duly elected government to be sworn in and it is now time for President Irfaan Ali and his team to turn their attention to “reigniting the economy” which has been at a standstill since the passage of the December 2018 no-confidence vote.

In this regard, Piet and Deaken outlined that the authorities must focus their attention on reviving and developing all sectors of the economy in order to avoid becoming too dependent on the resources from the oil and gas sector.

“The oil and gas sector cannot be Guyana’s sole focus. The country must continue to diversify its economy to avoid an oil-dependency,” the experts declared.

President Ali, on several occasions before had stated that while serious efforts will be made to fully capitalise on the benefits from Guyana’s oil and gas sector, other key sectors, such as sugar, rice, bauxite, gold, manufacturing and services will not be ignored.

Due to the political uncertainty from the elections and the lockdowns from COVID-19, the Guyanese economy had reached a standstill. International investments were delayed, people lost their jobs and banks stopped providing credit.

During his inauguration on Saturday President Ali gave assurance that his administration is dedicated to the reformation and re-opening of the sugar estates that were closed under the previous government.

Ali lamented that “the sugar industry has virtually been abandoned in the past five years, and the workers have been deserted.”

The Head of State explained that while “we are still putting together the torn fragments”, the picture of the industry appears “deeply distressing”.

Dr Ali bemoaned that “the once greatest contributor to our nation’s economy, has been beaten down to its knees, and the workers tossed to a heap of unemployment and misery.”

In this regard, he reiterated the promise he made on the campaign trail, that is, to restore the sugar industry so that workers and communities as a whole will begin to thrive again.

Dr Ali also promised that the other sectors of the economy that performed dismally during the APNU/AFC regime will be restored to their former glory.

“It is bad enough that I must draw your attention to other areas in our economy, including bauxite, rice, agriculture, forestry, mining. We have already commenced work to ensure we do all that is necessary amid the constraints to put back these industries on the path of development,” the President disclosed.

President Dr Irfaan Ali and members of his new Cabinet

Meanwhile, Piet and Deaken argued that “because money is more valuable today than tomorrow”, the new administration should be conscious of any pending projects that have been pushed back due to the political impasse following the March 2 General and Regional Elections.

They noted that development projects that have been vetted and will bring in much-needed capital to Guyana, such as the Payara Field in the Stabroek block, should be given approval soon so that work could be fast-tracked.

ExxonMobil is hoping to make its Final Investment Decision (FID) on the Payara project by September.

According to the experts, if the government does not approve the development plan soon, oil revenues will be delayed. In fact, consultancy Wood Mackenzie projects that a 1-year delay in the Stabroek development could decrease the government’s share value by roughly US$1.5 billion.

The experts lamented that if there is a three-year delay, total losses to the state would increase to US$4.5 billion. “That is equivalent to 98 percent of Guyana’s GDP in 2019. Guyana cannot afford any more delays due to political or regulatory indecision”.