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Cash grants for Guyanese uncertain
…as Trump’s grip on Venezuelan oil could depress prices, economist says
(Kaieteur News) – The move by President of the United States (U.S.), Donald Trump to take over the oil resources of Venezuela could weaken the commodity price, therefore impacting the revenue flow to Guyana which can be used by government for cash transfers.
In an interview with Kaieteur News, Economist Elson Low shared this view, highlighting the impacts of the move on Guyana and its population. He cautioned, “Guyana must brace itself for a period of lower oil prices as the U.S.’s new relationship with Venezuela will put downward pressure on the oil price.”
Economist Elson Low
“This is because the Trump administration, according to the Wall Street Journal, has a target of US$50 per barrel of oil in mind. With the gradual revival of Venezuela’s oil industry, now effectively managed by the US, more supply will enter the world market, lowering prices,” he added.
The former advisor to the Opposition Leader said the country could receive billions of US-dollars less at US$50 per barrel instead of an average long-term price of about US$65.
As such, he suggested a more structured approach to cash transfers to ensure Guyanese still benefit from the nation’s wealth.
“Rather than discretionary cash grants which depend on so-called “good behaviour” and are subject to fluctuations in oil prices the government should tie cash grants to accomplishing specific efficiency and anti-corruption goals,” Low said. These include aiming to eliminate cost overruns on infrastructure projects and conducting due diligence on major developments such as the Gas-to-Energy initiative to avoid revenue waste.
Low believes this will ensure cash grants are regular and sustainable since they will be funded by the savings which come from reform. He added, “The current system, in which it is unclear the source of funding for these cash grants, is entirely open to the whims of the government, should oil prices fall.”
The Economist noted that over time, Venezuela could return to its peak production of about 3.5 million barrels a day. As such, he urged, “The Guyana government should focus on better monitoring and evaluation of its spending so that tax payers can get more value out of each dollar spent. Hiring international consultants, leveraging AI tools and conducting careful cost analysis across all areas of procurement will be necessary if the country is to weather this period of lower revenue.”
Further, he indicated that failing to do so would result in tight national budgets, with limited resources allocated to developing a social safety net. He said, “Given the administration’s current posture toward cash grants, it is also likely that they will use these lower prices as an excuse not to provide relief. Reforms which create efficiencies will instead allow citizens to continue to benefit. The government must ensure this happens and this year must budget for such improvements.”
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.”
Notably, the Head of State has said Venezuela “will be turning over” up to 50 million barrels of oil to the US.
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