This plan to borrow against oil reserves can drive away investors

Dear Editor,

On the 11th September 2015, I wrote to all the national newspapers to share my analysis of the GoG’s Budget. That letter was published in the Stabroek News of 14th September entitled `An austerity budget would have been more prudent’, however a most important paragraph was omitted by the Editor as I could not provide a source for my “insider” knowledge. I reproduce that paragraph now as the contents have been confirmed by the recent utterances of the Minister of Governance, the Hon. Raphael Trotman.

“All of this may be seen as “gloomy” but it would pale in comparison to the not so secret plan of the government to borrow against the recently discovered oil reserves, far from creating the promised `Sovereign Wealth Fund’ this move would be essentially the stealing of our Nation’s future, no bank will lend against oil reserves until at least a development plan is put forward by the oil company and this is not expected  within this five year term, expect the APNU+AFC Coalition to “break the bank” in an effort to be re-elected in time to spend the future wealth.”

To date no development plan for the recent oil find has been filed and it is not possible to “borrow” from reputable institutions or receive “up-front” payments of any kind from ExxonMobil without same. We are years away from the filing of a development plan and the undue haste of the Minister to lay hands on “cash” may well have the opposite effect as investors can or will shy away from such behaviour. Given the present low oil prices, investor confidence is important to our development in oil and other sectors.

President Granger has spoken repeatedly of a Sovereign Wealth Fund for Guyana from the proceeds of the oil reserve sales,  it would seem his cabinet is oblivious to his plan.

I once again urge the utmost caution in the use of the Nation’s finance as the world faces a global economic downturn, do not spend more than we earn and send us back to our “begging bowl” days.

Yours faithfully,

Robin Singh

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