Dear Editor,
The recent concerns raised over indebtedness to China and possible unforeseen expenses in the oil sector, due to an oil spill, should be given further consideration. In addition, we are not assured that the current party with its history of prudent fiscal management will always remain in power. The past five years have shown us how quickly a surplus can become a deficit when administered irresponsibly and corruption is allowed to take hold.
Although debt forgiveness, as seen in the case of Kuwait and other lenders of the past was accomplished, China does show a preference for asset accumulation when debt payments are not made. Given the sensitive nature of the region due to the large Venezuelan oil resources and US-led embargoes, we as a nation must do our best to avoid a large debt with China. Our financial independence is directly linked to our sovereignty, and the risks before us, however, remains the same. Dry oil wells can reduce our profit by increasing cost in the oil and gas sector; an oil spill can also reduce the profitability of the sector and may result in significant loss; and the delay in the sale of LNG resources, while flaring occurs, reduces the revenue intake for the sector.
Therefore, it is best to be extremely cautious in our expenditures to ensure that our financial debt with China is easily repaid when considering the risks still present in the oil and gas sector. It is currently a very sensitive geopolitical environment, and the best approach would be to pay down our debt quickly with our Chinese lenders, while ensuring the profit from the current oil and gas finds is maximized and invested to increase returns at the lowest possible level of risk. Maximizing the risk reward ratio on our SWF investments is essential to maintaining our financial independence. As mentioned previously, the Norwegian SWF investment model is a great benchmark to review.
Sincerely,
Jamil Changlee
