Guyana lacks clear development plan to reduce poverty - Int’l Energy Analyst

Guyana lacks clear development plan to reduce poverty – Int’l Energy Analyst

Jul 10, 2023 News

…as huge chunk of Budget focuses on infrastructure projects

Kaieteur News – Although Guyana is positioned as the fastest growing economy on earth as a result of the oil production activities that commenced in 2019, almost 50 percent of the population still lives on less than $1,000 per day, according to recent World Bank statistics.

Americas Market Intelligence Co-Director of Energy Practice, Arthur Deakin

As the revenues continue to trickle in from the production of oil in the Stabroek Block, the Government of Guyana (GoG) is yet to implement a clear structure to improve the lives of its citizens in the country’s poorest communities.

Guyana was recently featured by The Newsmakers, where they flagship current affairs programme, featuring in-depth reports and interviews, delved into the newfound wealth and whether it will bring prosperity or turmoil. Hostess Andrea Sanke included Director of Energy at Americas Market Intelligence, Arthur Deakin, as well as Director of Financial Analysis at the Institute of Energy Economics and Financial Analysis (IEEFA), Tom Sanzillo and International Lawyer, Melinda Janki in the panel discussion.

Deakin was asked to share his views on why Guyana still has high levels of poverty and why he was optimistic about the situation. In his response, the International Energy Analyst explained that the Government of Guyana has made “fruitful decisions” which led to investments from the ExxonMobil-led consortium in the Stabroek Block. He noted that Guyana’s oil sector has been moving at one of the fastest paces known in the industry; however when it comes to translating that wealth to the population, this has been taking some time. In fact, the specialist pointed out that for the wealth to benefit the population, it would require structural planning by the administration.

Deakin said, “The government lacks a clear vision, a clear plan on how it’s gonna spend the money it’s receiving from the oil revenue so I think there is a lot of room for improvement.”

Following up on this view, Sanke pointed out that Guyana’s Head of State, Dr. Irfaan Ali has indicated that the oil will not become a curse but will benefit the population. She therefore asked the Energy Analyst to explain his belief that there was no clear structure in place for the revenue to reach the poorest citizens in the country.

To this end, Deakin noted, “Of course, the government is going to say that they are doing a really good job, they wouldn’t admit that they are not and there is a lot of credit for what they are doing in terms of bringing in new investment for the oil and gas field for the Stabroek Block and also surrounding blocks…but when you’re thinking about structurally planning, sustainable long term wealth for the population, I think there’s still a lot to be done. I haven’t seen a plan or a clear structure of how the money is gonna be spent in a way that’s good for the population.”

Weighing in on his view, Financial Analyst, Tom Sanzillo said he believes the government’s plan for the oil revenue is to utilize the funds to remain in office.

Sanzillo reasoned, “The budget of Guyana is about US$3.6 billion about a billion of that came from oil this year. The budget’s doubled in the last two years from just under two billion and what you have is large expenditures on capital and the idea that there is no plan, well there is a plan. It’s very clear there is no plan to put the money away in a sovereign wealth fund like Norway, there is only an annual budget process and that annual budget process includes the oil revenues that come in and local leaders choose how that money gets spent every year and they have been spending it so far on capital expenditures and that is not going to support the kind of economic development in poorer communities that you want.”

According to the International Financial Expert, while the construction of new roads and a gas plant is high on government’s agenda, this may very well be to Exxon’s benefit rather than the poor citizens in the country.

To this end, he posited, “So what you have is a plan and the plan is to use the money to keep the existing political structure in power and that’s what gonna be done.”

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