SPENDING THE EARLY WINDFALL

Jan 04, 2020 Features / Columnists, Peeping Tom

Oil production began on 20th December last year, and not even a photograph was sent to the media by either the government or ExxonMobil of this historic event. As such, Guyanese have no proof that production has actually begun.
In fact, some persons are saying until they see the evidence, only then will they believe that oil production has begun. It is about time that the photographs of the first oil pump and the first oil shipment be made public.
Oil production began three months ahead of schedule. Originally, production should have started in March 2020. Its early start is bound to raise suspicions. Some persons have even been suggesting that production may have long started.
An unorthodox method was used to select the marketer of Guyana’s oil, but to date, the country has not been told when it will be receiving its share of oil and the terms under which it is to be sold.
Oil prices have soared in light of the US’ resort to political assassination in Baghdad. And there is likely to be continued instability in oil prices. While Guyana will get more money from oil production, it will also be spending more money on oil imports, should prices rise.
It is for all of these reasons that the government should ensure that at least the early-production windfall is pumped back almost immediately to help persons in the country.
The early start to oil production means that the country is likely to benefit from an estimated US$75M in revenues which it had not anticipated. There have been demands for cash transfers to be part of the spending of Guyana’s oil wealth.
There is no reason why this extra three months of oil revenues, which Guyana had not been expecting should not be shared out to the people. After all, if the government had the fiscal space to provide public servants with tax-free increases in salaries, retroactive to January 2019, there is no way in which this G$15B which will soon come Guyana’s way cannot be distributed to the people. This would work out to more than G$75,000 per family – a decent small piece which can be given out as 50th Republic anniversary gift.
Alternatively, the government can use this money to write off the debts of all students from the University of Guyana. They would still have a great deal left over to do other things.
It is one thing to promise free university education, but this only caters for future students. It does nothing for students who have paid for their education already or those who are paying now.
It would not be fair to write-off the student fees for those who have not, as against those who have paid. This will present a dilemma if the government decides to go this route. One of the solutions to the problem would be for the government to write-off future debts, and to grant a credit to those who have paid. The credit could be treated as a deferred benefit.
These are the types of conditional income-support measures which can be employed to provide assistance to persons from the unanticipated windfall which has come government’s way. It is government’s responsibility to use the early proceeds wisely, but people also expect that they would also benefit directly.
A direct cash transfer to families is one way of doing so. Writing off the educational debt of students is another way. If on the other hand, the monies go into infrastructure, it will end up benefitting a few contractors. If however it is applied as a direct benefit, it will help more persons.

(The views expressed in this article are those of the author and do not necessarily reflect the opinions of this newspaper.)