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Going for broke
Dear Editor,
The good news is that Guyana is not bankrupt; the bad news is that we are broke.
Consistently spending more than we earn has depleted the Bank of Guyana foreign exchange reserves to the point where we are holding onto them to pay our import bills, while we run up a massive local currency overdraft.
The good news is that oil production is in 2020, the bad news is that it will not earn enough to continue the current rate of expenditure.
Guyana would need to earn at least US$250M extra per annum to maintain the Granger administration’s lavish lifestyle, for that is the rate at which the reserves were depleted.
As unpopular as mathematical computations have become, it is important to let our people know that while manna will be falling from the heavens, it will take a massive amount of work to rebuild and then grow the economy of Guyana in 2020 and beyond. I will use US dollars instead of barrels for this calculation, to be as clear as possible.
Using a generous earning figure of US$2B in total production for 2020, a 2% royalty accrues to our coffers, $40M, that leaves $1960M, minus 75% cost oil (1,470.000,000) which leaves $490,000,000 as profit oil to be divided equally between the operator and Guyana.
We now have $245M, then we pay 40% of that to the treasury for the taxes owed by the oil companies, $98M and the remaining $147 M to the Natural Resource Fund.
Total available is $138M to the Treasury, minus whatever we spend on lifting and brokerage fees to sell our profit oil. Then there are the monitoring fees; the consultancy fees; all adding cost to oil.
There are no reserves to prop up Granger’s poor economic policies in 2020, in delaying the March 2019 elections for a year.
Granger has moved Guyana from parliamentary democracy to a rule-by-decree nation.
Granger will try to sell the hardships in the first two months of 2020 as constraints caused by the 1/12th spending provision.
The reality is that he (Granger) has gone for broke, spending every last cent in the treasury with the hope for re-election and the promise of oil.
David Granger has gambled on his future, he has used our treasury to so do; the question every Guyanese must ask ourselves is: “Are we going for broke too?”
Elections are on the 2nd of March 2020.
Robin Singh
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