Modeling the median or masking the mainspring? A critique of our current fiscal narrative

Jan 04, 2026 Letters

Dear Editor,

Recent public statements by President Irfaan Ali regarding Guyana’s economic “modelling” deserve closer scrutiny than the high-level jargon of “median prices” and “upside/downside” risks might initially invite. While the President’s intent to project fiscal prudence is clear, the underlying numbers suggest we are building an edifice on a foundation of black gold, while the traditional pillars of our house are being left to the elements.

The President correctly identifies the danger of tethering recurrent expenditure to “futuristic prices.” However, this is a narrow view of economic health. While we may not be using oil to pay every civil servant’s salary today, we are using it to fund nearly the entirety of our massive capital expansion. The IMF recently pointed out that our non-oil primary deficit has widened to nearly 38% of non-oil GDP. This means the “non-oil economy” we boast of—which grew 13.1% last year—is essentially a subsidiary of the oil sector, fueled by construction and services that would evaporate the moment NRF withdrawals are curtailed.

Furthermore, the focus on the “median” price of oil is a dangerous oversimplification. In a world hurtling toward an energy transition, the “median” is a moving target. Even more pronounced now that the developments in Venezuela would result is a vast paradigm shift in oil markets around the globe. To claim a model is robust because it avoids “guesswork” is to ignore the reality that all commodity-dependent planning is, by definition, an educated guess.

The “pros” of the current approach are undeniable: visible infrastructure and record-breaking headline growth. But the “cons” are becoming impossible to ignore. We see a sugar industry in a 21.8% contraction, a rising cost of living driven by non-tradeable price hikes, and a growing dependency on a single variable: the price of a Brent barrel. This is not diversification; it is a high-speed pursuit of the Dutch Disease.

A truly nuanced approach would involve:

De-linking the Budget from Discretionary NRF Withdrawals: We need a rigid, law-bound ceiling on how much oil revenue enters the budget, regardless of “median” projections, to force the non-oil sector to become self-sustaining.
Tradeable Sector Incentivization: Instead of just funding construction (which is temporary), we must aggressively subsidize the competitiveness of export-oriented agriculture and manufacturing.
Radical Transparency: “Careful design” should be proven with public access to the stress-test models the government claims to use.

If we continue to preach diversification while our ledger shows an increasing addiction to the NRF, we aren’t avoiding the “tank”; we are simply building a faster car with a smaller fuel tank. It is time to move past the jargon and admit that without a stronger non-oil tax base, our economy remains a hostage to fortune.

Sincerely,
Hemdutt Kumar

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Modeling the median or masking the mainspring? A critique of our current fiscal narrative

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