Guyana’s entrance into the elite world of petroleum producers was expected to be on a high note as global agencies such as the International Monetary Fund (IMF) predicted that the nation would see more than 80 percent growth this year. But those hopes were dashed following the onslaught of the COVID-19 pandemic on the economy. Be that as it may, Guyana can still survive this time of trouble if it is wise in resisting temptation along the way.
In fact, Amy Myers Jaffe, a Research Professor attached to the Fletcher School of Law and Diplomacy at Tufts University, noted in her latest piece stated, if Guyana can resist the urge to pay today’s costs by borrowing against future oil receipts, the nation could yet ride out this crisis.
Jaffe recalled that President Irfaan Ali has promised to create a petroleum commission to ensure transparency for how Guyana’s oil revenues are spent and to prevent undue political interference in the oil and gas sector. She alluded to the importance of this initiative as she reminded that Guyana, which has received refugees from crisis-stricken Venezuela, is well aware of what happens when oil wealth is not properly stewarded.
But surviving this year’s low oil prices is only the beginning, the Research Professor stated. To thrive in the long term, she said Guyana will need to sink much of its oil earnings into building other sectors to avoid overdependence on one volatile source of revenue. She said this is especially key in a world that’s moving away from oil as its main energy source.
Jaffe was keen to point out that the World Bank finds that very few petrostates have adequately diversified their economies. Exceptions include Malaysia and Dubai, which have both used oil wealth successfully to build a broader economic foundation and have avoided the dreaded “resource curse.”
She said that these countries will be models for Guyana, if can just get through 2020 first and avoid the temptation of borrowing against its oil resources.