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Heavy borrowing, sharp spending cuts and drastic foreign currency shortage looms – Ram warns
…as Trump plots to lower oil prices to $50 per barrel
(Kaieteur News) – The ambitious scheme of American President, Donald Trump to use Venezuelan oil to drive the commodity price down to US$50 per barrel could be dangerous for a blooming petrostate like Guyana.
Painting this grim reality in his recent column published by Stabroek News was Chartered Accountant and attorney, Christopher Ram.
Attorney-at-Law and Chartered Accountant, Christopher Ram
The newspaper columnist spelled out a number of looming challenges and difficulties Guyana could face as a result of the actions taken by the President and largely supported by the government of Guyana.
Ram explained, “Donald Trump has announced his intention to use Venezuelan oil to drive the global price of crude down to US$50 per barrel. If he succeeds – and there is no effective international mechanism to prevent it – the impact on Guyana will be severe.”
The Chartered Accountant warned, “At this price, Guyana’s oil revenue will collapse. The State would receive approximately US$1 per barrel in royalty and about US$7.50 in profit oil.”
He was keen to note that 50% of the national budget in 2025 was supported by the Natural Resource Fund (NRF) or oil money. As such, the lawyer noted that Guyanese can expect increased and unsustainable budget deficits unless a raid on the oil account is carried out.
“The Government would face three options, none of them attractive: heavy and expensive borrowing, sharp expenditure cuts, and drastic shortage of foreign exchange. Borrowing on that scale would undermine debt sustainability. Spending cuts would fall on wages, social programmes, infrastructure, and transfers – areas that have expanded rapidly in anticipation of sustained oil revenues. Foreign exchange shortages would follow quickly,” Ram reasoned.
He said reduced income from oil production will affect the supply of U.S. dollars just as import demand remains high. Pressure on the exchange rate would also intensify.
Additionally, the cost of food, fuel, medicine, and construction materials would rise sharply. Likewise, inflation could also be impacted, compounding the already high cost of living.
On January 3, U.S. military forces extracted the President of Venezuela, Nicolas Maduro and his wife, Cilia Flores to be tried in the United States for drugs and weapon charges.
In the interim, U.S. President Donald Trump announced that he will be “run” the sovereign state until “we can do a safe, proper, and judicious transition.”
While Opposition parties and civil society players in Guyana have strongly condemned the act, the government of Guyana (GoG) has not expressed similar sentiments. After Maduro was captured, President Dr. Irfaan Ali in a social media post on Saturday said he met with the Defence Board, the National Security architecture, regional commanders, and other senior security officials amid the unfolding situation in Venezuela.
Previously, Ali cited Guyana’s full support for regional and international efforts aimed at dismantling criminal activity and protecting peace and sovereignty. To this end, he sent a clear message, “Guyana continues to support every effort to end and destroy criminal elements that seek to undermine the peace and destabilize the freedom of our country and our region and our world.”
Notably, there is no evidence that suggests the Maduro government is linked to these activities.
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