‘Rich-on-paper’ Guyana faces two sets of danger as it produces more- former US official

Jul 29, 2022 News

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Kaieteur News – International bodies as well as local officials have touted Guyana as the fastest growing economy in the world because of its oil and gas sector but a former US Bureaucrat told President Mohamed Irfaan Ali on Wednesday that his country is only “wealthy on paper”.

This means that as Guyana produces more oil, it is presumed to be rich and many financial institutions would be willing to finance projects in Guyana but with high interest rates. President Irfaan Ali was at the time a guest on the Center for Strategic and International Studies (CSIS) programme titled, strengthening the Guyana-US relationship and was being interviewed by the former bureaucrat, Daniel F. Runde.

Runde is now the Senior Vice President and Director on Project on Prosperity and Development, of CSIS. One of the questions he asked Ali was if he (Ali) could imagine a different sort of financial cooperation with the United States, given the fact that the country does not have the capital as yet, despite it is considered to be the fastest growing economy in the world.

However, before posing this question, Runde told Ali that it worries him that Guyana is going to become rich quickly but on paper. “One of the things that worries me is that on paper you’re going to become very (rich)  quickly maybe not today but in five years’ time and you know all the terms upper middle income, high income… So the bureaucrats are going to say and I’m a former bureaucrat… well on paper, you’re a wealthy country.” With this being said, Runde went on to ask his question about Guyana seeking other sorts of financial cooperation because it does have the capital it needs to address certain developmental issues in the areas of education, agriculture, transport, climate and food security.

He continued his question by further asking Ali how can the US be of help to Guyana and suggested that if a USAID Mission is set up in the country, it could be one form of financial cooperation that affordable. He added that he would like see World Bank play a greater role in terms of financing projects in Guyana. However, Runde hinted that because of the fact that on paper Guyana appears to be a high income country the World Bank would not be willing to cooperate and the most engagement it would get is with the Inter-American Development Bank because it more reliable.

“I’m sure the World Bank looks at you and say, Oh you’re kind of a higher-income country and so the most engagement you would get is probably from the Inter American Bank they are the most reliable organisation for this work”

Kaieteur News understands that the danger this poses for Guyana is that because it is only rich on paper development loans would attract higher interest rates because it appears to be a high-income country. Runde then explained how the USAID mission can assist Guyana and Ali in his response said “That conversation have started and this week have been about that, redefining the relationship, looking at the strategic outlook of Guyana and aligning that with the various actors here in the US , so that process has started.”

He added that that is why the government recently signed a memorandum of understanding (MOU) with the US Exim Bank for US$2B. “IDB Invest is playing a much more active role in the market these days. If you look maybe a year from now at the financing portfolio of Guyana, it will be very impressive because you will see the EU, UK, US, China, you will see a multifaceted approach in terms of the diversification and the diverse nature of the financing that will be supporting the development,” President Ali added.

Speaking on Guyana’s Gross Domestic Production (GDP), the Senior Minister with responsibility for Finance, Dr. Ashni Singh, stated that Guyana’s pace of development and oil production makes it one of the fastest growing economies in the world.  For their part, the International Monetary Fund (IMF) has forecasted that Guyana’s economy will grow by 47% this year due to oil exploration, and the World Bank is projecting that the country’s economy will expand by a massive 49.7 percent this year.

Guyana’s positioning is mainly attributed to the plethora of finds by American oil giant, ExxonMobil subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), on the prolific Stabroek Block, which spans more than six million acres in the country’s Exclusive Economic Zone (EEZ). EEPGL is the operator of the country’s richest oil block, which is estimated to hold nearly 11 billion barrels of equivalent of oil (beo). With two oil ships, namely the Liza Destiny and the Liza Unity, in operation and producing approximately 300,000 barrels a day, Guyana’s growth rate is forecast to jump.

However, despite Guyana is being touted  as “the fastest growing economy in the world,” President  Ali has been using recent forums and events to remind the world that Guyana is not really a rich country, but a poor one that is in need of concessional financing. Since leaving Guyana on Sunday for Washington DC, the capital of the United States of America (USA), Ali has been featured on multiple programmes – during which he reminded people that Guyana is not a rich country and invited foreigners to take advantage of the plethora of resources the country has to offer.

During one of the programmes, Ali shared with the audience that he had attended many forums where people tell him, “Oh you’re from Guyana, the new rich kid on the block in oil and gas.”  Ali said that he would usually respond to such statements like this, “I say, no, no, I am from Guyana, the humble country that is poor and looking for concessional financing.”

Similarly, at the recent launch of the Pegasus Suites and Corporate Centre, President Ali told the gathering that Guyana is not rich and in need of concessional financing despite being an oil and gas producing nation.  The president had mentioned, “We need low interest financing, don’t tell us that we are rich, no. You classify us as low income. Once concessional financing is there, we are very happy.” The President sought to explain that development does not take place over night, but is likely to take a ‘longer time’. He said, “Let’s not rush to this thing that oh we come from an oil producing country of Guyana and we are this rich country. Don’t fall into that narrative. That narrative will self-destruct.”

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