Professor Clive Thomas is proposing that some part of Guyana’s oil wealth be used for cash payments to every Guyanese household. He has suggested a figure of one million dollars or whatever is the amount that can be paid.
It is not an unreasonable suggestion, except that Professor Thomas seemed to have overlooked certain calculations. He seems to have forgotten that Guyana only agreed to a 2% royalty and 50% profit oil which works out, after cost recovery to around 14.5%, leaving very little to be distributed in the early years of oil production.
He also seems to forget the fact that the government is which he serves is not in favour of cash payments, evidenced by its cancellation of the cash grants which were paid to parents of school children.
But more importantly, the oil money is going to be channeled into a Sovereign Wealth Fund, which limits what can be spent each year. Norway limits annual spending to around 4% of the Fund. If a similar model is applied to Guyana, it would mean that in the early years after first oil, very little resources will be available to pay cash grants to households.
However, it is not difficult to determine where these billions of dollars are going to come from to pay cash grants, and especially by the government, which would prefer to spend the money than to place it in the hands of citizens for them to spend.
Guyana does not need oil revenues to pay cash grants. The resources are there to pay the cash grants presently. The political will and public pressure are missing.
The government is awash in revenue. The government inherited a flush treasury. The government is spending in excess of 200 billion dollars each year. Each day alone, the public service consumes more than 550 million dollars in current expenditure. This is on a daily basis. So the money is there; it is just that it is being spent on a monstrous bureaucracy which no government seems willing to dismantle.
Instead of reducing the public bureaucracy, the government is bent on expanding it. And most of the oil money is going to end up being gobbled up by the public bureaucracy, leaving little or nothing for cash grants for households.
I reiterate, in case it hasn’t hit you – five hundred and fifty million dollars are spent each day in running the public bureaucracy. There are people sitting in government offices doing very little and receiving hefty pay packages each month, while young persons, just out of school and willing to work, are not finding jobs.
Hundreds of millions of dollars are being spent to subsidize electricity in certain communities while in others, workers are being placed in the breadline because the subventions which they need to retain their jobs have been denied.
We have Guyanese earning consultants’ salaries and not doing consultants’ work. The APNU+AFC government has brought in some experts from Estonia to help develop a digital governance roadmap. Well what ever happened to our local ICT experts within the government who are working for super salaries? Why can’t these high paid persons working for consultant-level salaries produce the roadmap? Why do experts have to be imported? What is the government paying these fat cats to do?
It is totally unacceptable that taxpayers are financing hefty salaries to a whole range of persons within the government and three years since the new government took office, we do not have a revised energy plan.
The government was hopping up and down recently in excitement over being able to unlock funds being withheld by Norway under the Low Carbon Development Strategy. The government is in for a rude awakening, because Norway is not going to release any money until the government comes up with a better plan than Amaila.
There has been a lot of talk about Guyana becoming a green state. A Department of the Environment was established and yet the Guyana Green State Development Strategy is stuck somewhere.
Guyana does not need oil for cash payments to households. A 20% decrease in public expenditure will release about forty billion dollars per year.
Why then is the Guyana Teachers’ Union indicating its willingness to reduce its 40% demand for wage increases for 2016? The money is there for wage increases and for cash grants to every household. We do not need to wait for first oil.
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