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‘No link between growth in GDP and prosperous lives for Guyanese’—Int’l Lawyer, Melinda Janki
By: Davina Bagot
Kaieteur News – Guyana’s Gross Domestic Product (GDP) has been on a springboard over the past four years, charged heavily by the burgeoning petroleum sector. With massive double-digit growth being recorded, the small South American nation has emerged as the fastest growing economy, creating the illusion of not only a wealthy country, but prosperous population.
International award-winning Lawyer, Melinda Janki
Award-winning Guyanese International Lawyer, Melinda Janki has however dispelled the link between the country’s growth in GDP and improvement in the lives of its citizens. During a webinar on Sunday ‘Guyana’s oil-boom or blowout?’ Janki who has been successful in litigations challenging the oil and gas operations locally painted a grim picture of the country’s reality as an oil producer.
She said, “Most of you have heard the various claims that Guyana is undergoing an economic boom, that Guyana is getting rich, that Guyanese are becoming more prosperous and these claims are based almost entirely based on Guyana’s Gross Domestic Product.”
She pointed out that the World Bank in 2022 said Guyana’s GDP increased by 62%, while the Bank of Guyana in 2023 reported growth in GDP by 33%. More recently, Janki said President Irfaan Ali touted a 49.7% growth in GDP during the first half of 2024.
The lawyer said: “this sounds very impressive but what does it mean? The (International Monetary Fund) IMF says GDP just measures the monetary value of final goods and services produced in a country, so that includes Guyana’s oil.”
She was keen to note that most of the GDP growth was driven by the oil sector. “In 2022, the IMF, looking at the World Bank’s figures of growth said actually the oil bit grew by 124%. That’s not that surprising because Guyana really didn’t start producing any oil until December 2019, so Guyana is starting from a very low place,” the Lawyer reasoned.
Janki noted that growth in the non-oil GDP that year was around 11% which continues presently as confirmed by the Bank of Guyana, which stated in a 2023 Report that the oil and gas sector continues to be the major contributor to GDP growth. “But that doesn’t mean that Guyana is better off economically. Why? The GDP includes Guyana’s oil production, but Guyana’s oil production doesn’t go to Guyana. Nearly 90% of the oil production goes to three foreign companies- Exxon, Hess and CNOOC-they take it, but it counts as part of Guyana’s GDP.”
In explaining the circumstances that allowed for this unbalance in the equation, she referenced the lopsided contract signed between the Government of Guyana and Exxon in 2016. That arrangement allows Exxon, the operator of the Stabroek Block, to deduct 75% of oil produced each month to repay the companies for its investment. The remaining 25% is shared equally with Guyana as profits. The country also receives 2% of all petroleum produced and sold as royalty; this is paid on a quarterly basis.
Janki told the almost 100 participants of the online event that oil has not made Guyana better off, in fact, reports indicate soaring food prices, forcing more people to eat from garbage cans. “The Bank of Guyana says inflation has gone up, largely driven by the increase in food prices, there are people eating out of garbage cans…you see more people sleeping on the streets,” the Lawyer argued.
On Sunday, Kaieteur News reported that oil production in the Stabroek Block catapulted Guyana’s GDP growth to a staggering 49.7% in the first six months of 2024.
The Government of Guyana’s Mid-Year report also emphasized a 12.6% growth in the country’s non-oil GDP between January and June this year, despite challenges in a number of traditional sectors.
Janki however argued that even the growth in non-oil GDP is linked to the petroleum industry, citing the construction sector as an example. This sector recorded a 43.7% growth during the first half of 2024, with sand and stone declarations estimated to have grown by 46.6% and 73.4%, respectively.
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