By Kiana Wilburg
The proven oil reserves in the Stabroek block have certainly propelled Guyana into the international limelight. Now, everyone wants a piece of the oil pie. In fact, everyone will want to offer a helping hand in building the oil and gas sector.
But the United Nations Development Programme (UNDP) is cautioning the coalition Government to be wary of every agency that wants to lend assistance.
In a report that was handed over to the administration since 2016, the Government was warned that it must figure out the landscape of donors before it, identify what they are really good at, and prioritize the aid that the country needs at this point. Oil and Gas Consultant and Local Content Expert, Anthony Paul who prepared the report for the UNDP, expounded further on this matter.
Paul said that Guyana comes into the eyes of the world for oil and gas exploration and production at a very interesting time. In this regard, he notes that recent high oil and gas prices, coupled with major discoveries in new places in the developing world, created a burgeoning industry of development aid focused on good governance in the oil and gas sector.
The Oil and Gas Consultant said that the quality of assistance is quite mixed, but, given that these countries have been traditionally dependent on aid, the donors have very high level access and respect.
Paul said, “Unfortunately, not all bring high quality support or exactly what is needed. Neither some donors nor the government know what is important and priority. Some donors have niche areas of support and are very prepared to make that offer to the recipient government.”
He continued, “The end result is that many donors take up a lot of valuable time of the very few government officials who know how to deal with the myriad issues facing them, including developing and supporting their new hire staff. Not only that, but many donors do the same thing, with little coordination. With the drop in oil prices this area of focus has declined in importance in the development economics industry (it engages several corporations from the home countries of the major donors).”
The Local Content Expert added, “Guyana has to be able to manage these offers. To do so, Guyana must get help in figuring out the landscape of donors, identifying its own needs, ensuring that the work products are quality, and selecting and prioritizing aid. Among the issues to address are: Who is present and offering what? How does the Ministry determine priorities in engaging its limited resources?”
Paul noted that the European Union is excellent with negotiations and contracts; the Mexican Petroleum Institute is known for its capacity building expertise, especially as it relates to technical personnel, while the Commonwealth Secretariat is known for its well-respected legal drafting powers.
WORLD BANK ASSISTANCE
In June, last, the World Bank approved a US$35 million Development Policy Credit to Guyana. This sum is expected to support Guyana’s efforts to strengthen financial sector development and fiscal management to better prepare the country to benefit from its newly discovered oil and gas reserves and transform its oil wealth into human capital.
While currently nearly one in four people in Guyana live in poverty, experts estimate that GDP will surge when commercial production of newly-discovered oil and gas begins. In response, the government has embarked on a series of reforms to diversify the economy and turn oil windfalls into human development and sustainable growth in the long term.
“Guyana is making important strides to promote financial resilience and improve fiscal management, and has embarked on a broad-based reform programme,” said Tahseen Sayed, World Bank’s Country Director for the Caribbean.
“These reforms will be key to building a strong economy that is underpinned by a strategic management of public resources for the benefit of the Guyanese people.”
The World Bank said that the money will go towards enabling sound financial development to promote macroeconomic stability and long-term growth. In particular, the money will support banking reforms and depositor protection, the establishment of a deposit insurance scheme, implementation of a new insurance law, and the country’s anti-money laundering efforts.
“This Development Policy Credit, the first of a series of two programmatic financial and fiscal development policy credits, is financed from the International Development Association (IDA).”
Minister of Finance, Winston Jordan, said, “This financing provides critical support to our reform agenda and efforts to strengthen institutions and build a resilient economy that is capable of withstanding both external and domestic shocks.
“These reforms will be key to guide the management of oil revenues for the benefit of present and future generations.”
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