With Guyana’s proven oil reserves rising to over eight billion barrels from the latest finds by the American multinational ExxonMobil, we can well imagine what famous warning would come from the late Jamaican Prime Minister, Michael Manley.
Angry that ailing Jamaica had to beg cash-flush sister state Trinidad and Tobago (TT) for another loan during the oil boom years, the straight talking, democratic socialist left us an immortal and colourful quotation, that anyone from the Caribbean, who dread compulsory weekend purges, unyielding parents and depressed roads and economies, as I did, can readily recognise.
At a delegates’ conference of his ruling People’s National Party (PNP) in January 1980, the charismatic Mr Manley declared, “They say that Trinidad is going to be broke in three years…. that Trinidad has oil but they are allowing the oil to flow like a dose of (Epsom) salts through the country. Cadillac and Mercedes Benz are available but they can’t even patch a blasted pot hole.”
His bitter, long-time political rival, Opposition leader Edward Seaga later snorted in derision, “Manley again opened his mouth too wide.” In a 2018 piece for the Jamaica Observer newspaper, Mr Seaga recollected that the Dr. Eric Williams-Government chose to officially ignore the statement, leaving it to the Trinidad Sunday Express of February 4, 1980 to issue an appropriate response titled, “A dose of Manley.”
The Express scolded, “we must marvel at the sheer gall of the man who has unashamedly come hat in hand to this country to seek assistance, yet now stands revealed as deeply resentful of a country which has dug deep into its treasury to bail him out.”
Mr Seaga recalled, “Manley claimed that his remarks were ‘not intended to offend’ then, as expected, went on to state, when I challenged him on the statement, that I had misunderstood what he meant. A long circuitous explanation of what he said he meant followed.”
Under increasing pressure from United States for his fiery, non-aligned stance and close ties to communist Cuba, China and the Soviet Union, Mr Manley, like his counterpart leader and dictatorial friend, Prime Minister Forbes Burnham of Guyana desperately needed foreign exchange for basics. Beset by heightened political violence and worsening social and economic conditions, compounded by steep oil prices, Mr Manley had been forced to turn first to the Washington-based International Monetary Fund (IMF) and its draconian austerity measures.
He ended the IMF policy prescription programme of structural adjustment and harsh reforms just before the snap elections towards the end of 1980, but still lost to Mr Seaga’s Jamaica Labour Party (JLP) in an unprecedented bloody political battle that shocked the country, with hundreds of feuding supporters from both parties being killed.
In 1981, the TT Government extended a further US$96 million dollars to crisis-hit Guyana, which a grateful Mr Burnham, by then an all-powerful self-appointed Executive President under the revised and still very much used and abused 1980 Constitution, described as “an expression by deed in the future of the regional integration movement,” in reference to the Caribbean Community (CARICOM). Jamaica borrowed US$50M in 1976, with Mr Manley terming the related trade pact as “a genuine step forward in the integration process.”
The veteran Trinidadian journalist, the late George John reported TT was nearing the end of its petroleum boom brought on by the 1973 Arab-Israeli war which sent oil prices skyrocketing from single digit of around US$3 to more than US$30 dollars a barrel. By the 1974 close of the embargo against the United States of America, imposed by the Organization of Petroleum Exporting Countries, (OPEC), prices had risen nearly 300%, from US$3 per barrel.
Mr Manley’s “salts” remark came back to haunt him when a further US$50M loan to his country fell through because of the TT backlash and the collapse of an elaborate Dr Williams’ proposal for Jamaica’s bauxite and Guyana’s alumina to be processed into aluminium in a proposed Trinidad mill, fuelled by the twin islands’ gas.. In 1980, the TT Government, set up an Oil, Asphalt and Fertiliser Facility through which soft loans were given over a three-year period to CARICOM members including Guyana to enable them to finance the incremental cost of such imports from the country.
Trinidad and Tobago would become Guyana’s biggest bilateral creditor, with this country contracting significant debts from 1974-1985 under Mr Burnham’s People’s National Congress (PNC) regime through the critical Oil Facility, balance of payments support and settlements loans owed to the TT Central Bank.
Unable to meet its obligations, Guyana’s debt to TT jumped to US$402M including more than US$1M in arrears of principal and interest at the end of 1988, according to TT Central Bank Economist, Susan Ramirez. In a 2004 paper for the Economic Bulletin she calculated that upon termination of TT’s bilateral account in 1985, Guyana had built up an accumulated debt of US$205M, growing to US$223M by 1989.
TT took steps to recover the outstanding monies, but Guyana repeatedly failed to pay. Realising renegotiating was futile, Miss Ramirez said TT sought recourse at Paris Club meetings in 1996 to restructure the debt as Guyana was under another IMF structural adjustment arrangement. By this time the amount had soared to US$536.2M.
“In accordance with the Paris Club consensus, TT provided additional debt forgiveness of US$359.2M by reducing the debt stock outstanding to US$176.9M at an interest rate of 6.6 per cent. This debt stock write-off was equivalent to 6.2 per cent of the Gross Domestic Product (GDP) of Trinidad and Tobago in 1997,” she pointed out.
Noting that TT granted such debt relief, before Guyana’s other major creditors, and during times of severe economic hardship, when it faced gross imbalances and external account problems, also forcing it into an IMF standby arrangement, she observed, “Trinidad and Tobago has borne the heaviest burden of any single bilateral creditor in relation to the size of the economy.”
The economist lamented that agreements have been made at the IMF and World Bank level, “without care to the plight of many countries who themselves may be moderately or heavily indebted,” with some creditors such as TT bearing “a disproportionate share of the overall provision of concessional resources.”
Back in 1996, three years before the Janet Jagan-administration signed the fateful, first lop-sided agreement for ExxonMobil to explore for oil offshore, at least one prominent TT politician was publicly upset with the massive cancellation, charging Guyana had “picked the pockets of Trinidad and Tobago.” Now into his second term as Prime Minister, Dr Keith Rowley, aptly nicknamed the “Rottweiler,” visited in 2018, but graciously chose not to bite reminding reporters that the twin island republic has been a good friend, as he signed an energy Memorandum of Understanding (MOU) with then President David Granger, the status of which remains uncertain with the change of Government.
In May 2019, the Finance Ministry disclosed we fully repaid the slashed debt to TT. “Trinidad and Tobago, which was Guyana’s largest bilateral creditor about two decades ago, generously wrote off US$482.5 million or 90 percent of Guyana’s debt as part of the Paris Club arrangements,” it observed in a public debt report.
We can take away many lessons from Mr Manley’s stinging statement and Trinidad’s sobering experiences in spending, financial management and generosity. Decades later, countless holes remain whether along rural roads, depleted stabilisation funds, unbalanced national budgets, or in the arguments by ruling politicians as to why lop-sided production sharing agreements with energy behemoths cannot be re-negotiated as they traded donkey carts for Prados and Lexus.
ID is old enough to remember when the Guyanese dollar plummeted from $10 to US$1 in 1988, to $144 to US$1 in 1995. Her father took her to school on a battered Raleigh bicycle when the ancient Morris Oxford broke down.