Oil-rich Guyana would be bankrupt if it gave $1M to every family – Minister Bharrat claims

Jan 29, 2025 News

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…but country losing US-billions due to lopsided Exxon deal

Kaieteur News- Guyana’s Minister of Natural Resources, Vickram Bharrat has stated that the country would be bankrupt if it hands out GYD$1M to every family.

His remark was in response to comments made by Opposition Member of Parliament (MP) Ronald Cox. Last Friday, during his 2025 budget debate presentation, MP Cox said, “Under an alternative government, we will see $1 million being given to every single family in this country. Expanding the cash grant system to cover a large proportion of families.”

MP Cox’s suggestion of a cash handout to citizens is not new. Last year, President Irfaan Ali announced a one-off cash grant of $200,000 to every household. However, due to several concerns raised the initiative was reformed into a $100,000 cash grant for citizens 18 years and older. This initiative which is still being rolled out is expected to cost $60 billion.

While the Opposition MP believes that a $1 million cash grant to every family is possible, Minister Bharrat disagrees and states that such an initiative could leave the country’s bankrupt.

The minister said, “$1-million-dollar cash handout from the Honorable Cox, good luck my brother. Apparently, you have no idea as to the revenue earnings of our country. It would simply make our country bankrupt.”

Minister Bharrat told the House that the opposition MPs are making “fanciful recommendations and fake promises.” He noted too that if the government was to follow such a suggestion the country will be unable to build out its infrastructure.

“We will be unable to do anything whether its infrastructure, whether it’s healthcare, whether its education or any other service. We will be a bankrupt country once we follow your policy honourable Cox and the policy of the APNU+AFC,” he suggested.

Guyana’s Natural Resources Fund (NRF) received a total of US$2.5 billion for the year 2024. It should be noted that the government will be withdrawing about US$2.4 billion or $512 billion this year from the NRF to support its $1.3 trillion or US$6.6 billion 2025 National Budget.

What Guyana is losing out on

This publication had reported that Guyana has lost at least US$6.5 billion in oil revenue between the period 2020 and 2024, due to the lopsided terms of the 2016 Production Sharing Agreement (PSA). This “conservative estimate” was highlighted by Chartered Financial Analyst, Rennie Parris in his column published in Kaieteur News, ‘Talking Dollars and Making Sense’.

Parris described the failure by the Coalition government to secure better terms for Guyanese as one of the most significant acts of incompetence in the country’s independent history. The Stabroek Block PSA waives all taxes from the oil companies and caters for the taxes to be paid by Guyana; it gives Guyana a 2% royalty on its rich resources, and agrees to the oil companies recovering 75% of investments before the remaining 25% is shared, with Guyana receiving 12.5%. This publication had also reported that the deal lacks a ring-fencing provision.

Parris said, had the government reduced the cost recovery cap to 60%, insisted on a signing bonus of US$800 million, implemented ring-fencing, demanded a 5% royalty, and ensured the oil companies paid its own taxes, Guyana could have gained at least an additional US$6.5 billion in oil revenues between 2020 and 2024.

Moreover, a look at United States oil giant, ExxonMobil Corporation’s, first-ever disclosure of payments to host governments, it appears as though the company’s Guyanese subsidiary paid US$656 million in taxes to the Government of Guyana in 2023. However, the reality is that Exxon is not paying income taxes in Guyana. The company has said that while it is subject to Guyana’s income tax laws, the taxes assessed on the company’s operation are paid by the government, rather than the company itself.

ExxonMobil Guyana did not have to pay over GYD$197 billion in taxes to the Guyana Revenue Authority (GRA) for the years 2022 and 2023 [$138B in 2023, $59B in 2022], as the taxes were paid by the Government in keeping with the PSA.

While there have been calls for the Stabroek Block contract to be renegotiated, the People’s Progressive Party/ Civic (PPP/C) government has been adamant about not renegotiating the oil contract. The PPP position is that it will abide by the sanctity of contract and not seek to renegotiate the deal. For their part, the People’s National Congress Reform (PNCR) has promised that their next government will “review” the deal.

(Oil-rich Guyana would be bankrupt if it gave $1M to every family – Minister Bharrat claims)

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• cash grant, oil, PSA, Ronald Cox, Vickram Bharrat

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