GUYANA: Government rejects distributing oil money to every home

  • Worst thing you can do is distribute oil money to every home – Guyana President

President of Guyana, Dr. Mohamed Irfaan Ali strongly disagrees with suggestions that the country’s windfall revenues from oil production should be distributed to households, across the board. He made this clear during a press conference in Georgetown on Tuesday.

The President explained that doling out cash in that manner would be one of the worst things the government could do, and the quickest way to afflict Guyana with the dreaded Dutch Disease.

Ali was responding to questions about whether Guyana is already facing the resource curse, since its oil economy is leading overall economic growth. Finance Minister Dr. Ashni Singh had said Monday that the oil sector grew 124.8% and that the non-oil economy grew 11.5% in 2022. This resulted in overall economic growth of 62.3% for Guyana last year.       

The President argued that the growth of the economy, even when oil is not counted, is still world leading in the prevailing global circumstances. He noted that the prosperity in the oil and gas sector has helped to stimulate non-oil growth. He gave the example of the construction sector, which grew by 26.3% in 2022. The sector is undergoing a boom, so much that production of construction material in-country is insufficient. The government has encouraged locals to ramp up production of aggregate; and plans to continue importing to meet demand.

 DUTCH DISEASE

  • Dutch disease is a shorthand way of describing the paradox which occurs when good news, such as the discovery of large oil reserves, harms a country’s broader economy. It may begin with a large influx of foreign cash to exploit a newfound resource.

Ali asserted that the Dutch Disease is not about the growth of the oil sector, but rather, how windfall revenues are disbursed. The President has said that the government would not fall prey to populist narratives that encourage spending of oil revenues for short term gratification. Rather than dole out large cash transfers, the government has said it will prioritise investments in projects with lasting impacts.

“The revenue that comes from the oil sector has nothing to do with the Dutch Disease. It is what do you do with that revenue,” Ali said. “How do you use that revenue in the building out of the economy? How do you use that revenue in building prosperity in the country? How do you use that revenue in building out infrastructure, building up the social sector, health care, education? How do you use that revenue in building a diversified economy that functions on a broad economic platform that supports growth, that supports revenue streams that are much larger?”

Guyana has received more than US$2 billion in oil revenue since production started in December 2019. Projected revenues are expected to balloon further as projects are added offshore every year.

The government has proposed a budget for the fiscal year 2023 to the tune of GY$781.9 billion – oil will fund 26.7%. According to Budget 2023, GY$136.1 billion has been earmarked for the upgrade of thousands of roads and bridges. The construction of the Gas-to-Energy plants has been assigned GY$43.3 billion. Together, these projects account for almost a quarter of the national budget.

On the other hand, the finance minister said that the measures meant to ease cost of living pressures, such as reduced taxes and targeted cash transfers, will amount to GY$50 billion.

Also read:

Is Guyana’s economy self-adjusting or in the early stages of Dutch disease? | OilNOW

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Comments

  • Cheryl Smith  On 01/18/2023 at 12:26 pm

    That monster will make sure the Indians and Muslim home have a share of the oil money, but not the homes of Black people.

    • theonly  On 01/18/2023 at 6:09 pm

      Stop it with the collie and black people dividing, i dont know where you live but there is lots of people outside of guyana that is causing problems for us here in guyana especially albouystown.

    • Age  On 01/19/2023 at 7:56 am

      Cheryl, it’s a mess right there in Guyana for sure.

      Even Freddy is wisening up. The man now realize that there are persons in the same demographic you speak of who just want the oil money for themselves, and they want to shut the door on everyone else.

      The PPP signed a visa requirement for the Haitians though Haiti is part of CARICOM.

      But Freddy like he catch some sense because there are people in Guyana who really hate, and I mean, hate, certain groups of foreigners and refugees coming to Guyana.

      So I can say that if the PPP voters expect oil royalty cheques like Alaska while posting hate and vitriol against refugees and foreigners, well to speak as a Guyanese: “That good for dem”.

  • Peggy  On 01/18/2023 at 12:31 pm

    I think the President makes perfect sense. Doling out money makes for lazy citizens. Look for ways to use the revenue to create jobs (let them work for the money), improve infrastructure etc.
    Sad that the Guyanese populace is still mired in racism. It would be wonderful if ppl could just look at things holistically and for the good of the entire nation.

  • Cynthia  On 01/18/2023 at 2:16 pm

    Thank you, Peggy!

    Infrastructure, jobs, updated medical, educational opportunities, provisions for the elderly, etc. would be the way to go.

    Doling out money creates a young generation that has no clue of what it means to have ambition and work for what they want and desire. Just take a look at the “great” USA!

    Racism gets people nowhere. Guyanese has to stop looking at everything through the lens of race. Racism is a disease that was planted in the Guyanese psyche many, many years ago long before Guyana’s Independence by….

    I remember when we all lived as one people.

    It should not be which race is in power but rather who does what is best for the nation and its people,

    As a side note, it amazes me that these same Guyanese who cry and insert race in everything, greatest ambition is to emigrate to the US and is satisfied and happy to be governed/ruled by, not their race, but by the “white” man. But, when they live in Guyana they want their mattie to rule them.

  • WIC  On 01/18/2023 at 5:56 pm

    I concur with both Peggy and Cynthia. Hands up not hand outs as there are many who feel they don’t need to work but only sit back and let the good times roll in the same manner as they looked forward to barrels from overseas.
    I would also suggest that the govt. should consider banning the import of luxury vehicles and certain high end goods to prevent merchants both local/overseas from draining the country of its newly found wealth.
    In the Philippines, vehicles when are seen on the road that are banned, they are confiscated and publicly destroyed since it’s evident that customs officers took bribes to allow the import of same.

    A tough stance is required by the govt. or in 20-30 years’ time, the country will be back to where it was before the oil boom. It should invest 50-60% of the oil money in a Sovereign Reserve Fund and the balance spread among needed infrastructure projects fairly priced along with healthcare, education and social services.

  • Bunty Phillips  On 01/19/2023 at 1:10 am

    I want to make only two points.
    First, Milton Friedman, the Economics Nobel prize winner, has said:
    “Inflation is always and everywhere a monetary phenomenon, in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.” The current world problem of inflation is due to governments giving out unearned money to its populace which then makes demands for products which are in short supply and which cannot be obtained jn the near future. This causes an “auction” for the products, thus raising its price and causing inflation. The world Central Banks are solving this problem by raising interest rates which make it difficult for companies to raise capital to produce the products, resulting in employee lay-offs and higher unemployment, so that there will be less money around to spend. The result is unhappiness all around!
    The second point is simply an old saying which needs no further explanation.
    “Give a man a fish, and you feed him for a day. Teach a man to fish, and you feed him for life.”

  • Age  On 01/19/2023 at 7:47 am

    To those Guyanese who expect freeness while shutting the door on foreigners, the diaspora and refugees. That good for them.

    There are Guyanese who speak ill of foreigners and refugees. They don’t want or they don’t like the refugees coming to Guyana, because according to Freddy, the Guyanese nationality is a bad persona:

    https://www.kaieteurnewsonline.com/2023/01/19/death-of-an-indian-family-should-civilize-guyanese/

    “The Patel family contacted backtrack con artists in Gujarat to take them through Canada to the US. They perished in what the BBC wrote was “a world away from home.” The cruel death of the Patel family made headlines across the globe. I looked at the family photograph and tears came to my eyes.

    I hate, and I repeat, hate any Guyanese that does not want refugees to come to this country. I find any Guyanese that says too many foreigners coming to Guyana and Guyana must stop them as despicable humans.”

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