Latest update March 28th, 2025 6:05 AM
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- “It will be a very bad day for Venezuelan if they attack Guyana or ExxonMobil”—Rubio declares
- Guyana gets info on U.S. tax evasion allegations against Mohameds, Mae Thomas
- US$35 injected into banking system to address foreign currency shortage—VP Jagdeo
- Citizens to stage protest today against lack of access to information in Guyana
- Guyana vows to stand with U.S.
The challenge before us is to optimise the benefits of oil for all
DEAR EDITOR,
The International Monetary Fund (IMF) has projected an increase of Guyana’s Gross Domestic Product (GDP) by a staggering 86% in 2020. This is likely to be the biggest expansion of any economy by global standards surpassing, momentarily, some of the fastest growing economies in the world including China and India. One analyst described the situation as consuming water from a fire-engine hose rather than an ordinary pipe!
All of this may sound too good to be true and could very well be the case, given the several imponderables at the political and governance levels. For one thing, there is currently in place a ‘caretaker’ government which means that important policy, legislative and fiscal decisions cannot be taken until elections slated for March 2, 2020 are over, and a new administration is in place.
At a more fundamental level, there is a pervasive cloud of uncertainty which could potentially be a deterrent in terms of investor confidence. All of this is happening at a time when the country is in the cusp of an economic take-off, which could leapfrog the country to higher levels of prosperity.
It is true that our existing per capita income is low even by regional standards, which is further compounded by continuing low growth rates, thereby rendering it difficult to lift living standards beyond modest limits. Oil, however, can be a game changer. It has the potential to lubricate the economy to higher levels of performance, but this can only happen in an environment of public accountability, democracy and good governance.
There is the risk of high growth rates co-existing with pockets of poverty and underdevelopment as the experiences of several oil producing countries have demonstrated. Oil production is basically capital intensive and technologically driven, which means that opportunities for job creation are limited only to those with the relevant skills and access to capital.
An increase in the country’s per capita income is no guarantee of a higher quality of life, especially for the ordinary people, unless the oil revenues are used to advance pro-poor policies and programmes. It is possible for the country to experience growth without development and what economists refer to as ‘jobless growth’.
The challenge before us as a country is to optimize the benefits of oil for the benefit of all. This is the hallmark of real development. It is not sufficient to have higher levels of economic growth but more importantly to ensure that every Guyanese benefit in tangible ways from the oil bonanza.
Hydar Ally
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