A Sovereign Wealth Fund is not what Guyana needs

Dear Editor,

The Sovereign Wealth Fund (SWF) was first publicly discussed immediately before the May 2015 election when Exxon disclosed a “significant” find of oil reserves. In theory, the SWF or simply put, an account where the savings derived from a country’s natural resources are deposited so that they may be used for investment (almost always foreign investment) and budgetary stabilisation measures, is one where the citizens after hearing its explanation would shake their heads and say “yes – that is a good idea”. It is almost always discussed as a measure to ostensibly avoid the potential pitfalls of the over-referenced but universally false ‘Dutch disease.’ Cde Bharrat Jagdeo, the Leader of the Opposition, is right that a more careful analysis and understanding of comparative fundamental economic indicators will cause one to conclude that a SWF, especially one fashioned on the Canadian and/or Norwegian model, is not what Guyana needs. Why?

Norway, for example, uses their SWF to park their savings from oil in financial assets in foreign countries and their model has worked very well for them. The main reason the model has worked well for them is that Norway has more invested capital per member of the labour force than any other country – this means it is the most capital rich country – so adding further to the Norwegian capital stock would not be a very productive use and/or investment for its surplus capital. Developing countries on the other hand, like Guyana, are at the other end of the spectrum, ie, they have less capital per member of the labour force than most other countries so the more sensible long-term plan has to be to build up capital stock in the country. In so doing, all of the people of the country would more immediately and directly benefit from the profits of the natural resource extraction.

If the government and their public information actors and activists feel that this is just Jadgeo or Ramson playing opposition criticism politics, then they may want to have reference to the book The Plundered Planet by one of the most globally respected developmental economists, Professor Paul Collier, who is also, famously, the author of the book The Bottom Billion.

The People’s Progressive Party ought not to be the tutorial teachers for the current APNU+AFC government, but the party and the Leader of the Opposition are compelled and probably obligated to identify the failures of this current government since many of their decisions will have a long-term effect on the future of our country and the lives of all Guyanese people.

With each passing day, Guyanese are seeing the APNU+AFC government adopt with humiliation the PPP’s developmental blueprint for the Guyana, eg, the Amaila hydro project which was described by the present government as “criminal” is now “back on the agenda”; the contract to build the speciality hospital which was described as a waste of time and taxpayers’ money was signed a week ago with the Minister of Public Security Ramjattan’s former client without being re-tendered. Instead of focusing on the establishment of a SWF, the APNU+AFC would have better served this nation if they had established a Coalition Intelligence Fund before or immediately after their assumption of the office of Government of Guyana.

Yours faithfully,

Charles S Ramson, MP