Latest update May 28th, 2023 12:59 AM
Mar 22, 2023 News
...say billions in oil revenue being wasted on inflated projects
…sector hungry for transparent governance
By Davina Bagot
Kaieteur News – Guyana has often received counsel from industry experts who believe in strengthening the country’s institutional framework to run parallel with the development of its oil and gas sector. Though seven years have passed since the nation first discovered oil, little has been done on this front.
Weighing in on the prospects of the country, Jamaican Economist Dr. Damien King recently said he believes Guyana can easily fall prey to corruption, given its weak institutions. In fact, King even told the Jamaica Observer, a daily newspaper published in Kingston, Jamaica, that “Guyana is going to go nowhere.”
Local Economists, Elson Low and veteran, Ramon Gaskin told Kaieteur News that the Jamaican Economist has hit the nail on the head in terms of forecasting the future of Guyana, since the warning signs of economic gloom is already evident.
Low in an invited comment explained, “Oil-rich countries very often see those close to the government become extremely wealthy, while the average man is no better off. Many warning signs that Guyana is going nowhere are present.”
For one, the Economist pointed out that there is a glaring lack of transparency when it comes to managing the oil and gas sector. Low added, “There has been a sharp increase in inequality, and poverty persists despite huge oil reserves.” He was keen to note that Guyanese are still plagued by basic challenges such as persistent blackouts, while the education system seems to be worse off than before, although larger sums of revenue is being budgeted for the sector.
To this end, Low concluded, “Guyana is going somewhere, but not in a direction to benefit ordinary citizens.”
Meanwhile, Economist Ramon Gaskin who has over 60 years in the accounting field told Kaieteur News that Guyana is being steered down a dangerous path by its leaders. He believes, “It has a lot to do with, among other things, corruption in the country- that’s one of the big problems we have here in this country. Secondly, we have a big problem with wastage and spending like wild people and drunken people.”
Gaskin pointed out that almost every day a new multimillion or multibillion project is announced for roads and schools. More recently, he observed that some US$35 million contract was signed for the provision of electronic identification cards for citizens. Gaskin said this is a reflection of more “wastage” and “corruption” thereby justifying the Jamaican Economist’s prediction that the country will not make progress with its newfound oil wealth.
To add to his list, Gaskin argued that the government is yet to prove the viability of the US$2 billion Gas-to-Energy project that may very well cost as much as US$3 billion.
Compounding these issues, according to Gaskin is the fact that government has refused to openly discuss the management of the country as is seen with fewer sittings of the National Assembly. Not only that but the economist said the Speaker, Manzoor Nadir has also adopted an attitude of hindering the Opposition’s participation in decision-making matters.
In addition, Gaskin said the administration has been laying the foundation to secure total control of the oil sector, by installing its favourites on key management boards.
In an interview with the Jamaica Observer, Dr. King referenced several countries to show how the natural resources in a nation did not make it wealthy, but rather good governance.
The Economist explained, “It’s worth bearing in mind that very few countries in the world have grown from poverty to wealth, having done so on the basis of natural resources. Very, very few,” he continued, pointing out that oil-rich countries like “Venezuela is a basket case and Nigeria is a joke.”
King told the Observer, “One of the reasons why there is this thing called a ‘resource curse’, why countries which have resources tend to do worse, is because not having resources forces a country to have good governance, because that’s the only way the Government and the elite can extract wealth. For them to extract wealth to run the Government, they have to create a wealth-creating environment,” he said using resource-poor Singapore and Switzerland as examples of countries which have become wealthy through good governance.
On the other hand, he said, “You mark my words, Guyana is going to go nowhere.” King believes that the revenue from Guyana’s oil sector could cause corruption to increase in the country and make it worse off than it was before accessing the wealth.
At the end of February 2023, Guyana’s Natural Resource Fund (NRF) had a closing balance of US$1,379,353,505.59. The account includes profit oil and royalties garnered from the petroleum sector.
Last May, the Ministry of Finance reported that the sum of US$607.6 million was approved by Parliament to be transferred into the consolidated fund for the year 2022. Meanwhile, on February 10, 2023 it was announced that US$200 million equivalent to G$41.6B has been transferred to the national coffers.
When the Natural Resource Fund Act was passed in December 2021, the government had outlined how resources from the fund would be utilized. According to the Act, the funds would support “national development priorities.”
The Jamaican Economist is convinced that “political parties will soon start to squabble over the spoils to the detriment of the country,” the newspaper reported.
According to him, in countries that are not resource-rich, Governments will only have finances to function if it creates an environment to generate these resources. On the other hand, when nations, like Guyana are blessed with bountiful resources, there is no need to govern in this manner.
“[With natural resources] the Government then only becomes an institution to fight over the resources and extract it. And unless you have strong institutions to begin with, to put a constraint on the fight for spoils, it descends into corruption and violence because the spoils are so lucrative; it’s worth killing people to get into power. That’s what’s going to happen to Guyana because Guyana already has weak institutions,” King explained.
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