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Guyana lacks policy, legal and regulatory frameworks to maximise oil benefits-World Bank
As a new oil and gas producer, Guyana lacks the policy, legal and regulatory frameworks and institutional capacity needed to maximise the benefits from expected oil revenues and minimise downside risks associated with oil revenues and growth of the sector.
This is according to the World Bank, an international financial institution, which fights poverty worldwide through sustainable solutions.
In a document prepared for the Government of Guyana, the Bank was keen to note that the oil and gas sector affects multiple layers of the economy, and impacts the livelihoods of present and future generations, the environment and local communities.
If poorly managed, the financial institution warned that the development of Guyana’s oil and gas resources can be economically and socially costly for the country, failing to lead to sustainable economic growth, poverty reduction, and shared prosperity.
In addition, the Bank pointed out that there are environmental and social risks – usually low frequency but high impact – associated with oil and gas production that require effective and constant monitoring as well as significant investment in environmental damage prevention and response capacity, among others.
Notwithstanding this, based on experience in resource-rich countries such as Australia, Canada, the United States, Chile, Botswana, several Gulf countries, Norway and others, the World Bank said that positive impacts on overall poverty levels are achievable while mitigating risks, with good governance, investments in the quality and capacity of public and private institutions, investments in skills and technological capacities, efficient and transparent revenue collection and management, and sound macroeconomic and fiscal management policies.
It was keen to note that these countries triggered growth as resource-based economies, but ultimately succeeded in achieving wider growth, economic diversification and poverty reduction through targeted interventions.
The Bank said that the Government of Guyana would be wise in following these examples, by investing in the strengthening of its institutions and building the legal and regulatory capacity needed to manage the oil resources.
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