Dear Editor,
The Ghanaian oil expert Mr. George Owusu rejects the idea of cash grants and contends: “I do not believe in subsidies and giving people cash. You have to work for it. I would rather spend the money on training so that their income level will go up.” Notwithstanding, there is a feeling/perception among many Guyanese, including opposition politicians, that oil money is spilling over the country’s treasury, and they therefore wonder why a substantial portion of the wealth is not being shared among Guyanese.
Despite claiming that cash handouts “promote corruption and political favoritism,” PNCR political Leader Mr. Aubrey Norton advocates for huge cash grants of US$5,000 per household per annum (Demerara Waves: 6/3/23) without evaluating if the Natural Resource Fund (NRF) could afford this massive payout. I hope that Mr. Aubrey Norton is not deluded by his assertion: “Oil wealth only benefiting PPP/C elite and friends and family,” (SN: 1/1/2024) and seeking comfort in Reuters News Agency’s hype: “Oil money is flooding into Guyana.” (8/29/22).
If Mr. Norton’s dream should ever see the light of day, that would lead to a huge depletion of the NRF account in the sum of US$1.2 billion annually (an amount that would equal to 37.1% of Guyana’s 2023 budget), but more significantly, it would throw into disarray the purpose of the NRF account by torpedoing its foundational principles that ascribe funds to be used for budget support, inter-generational equity and national emergencies. Also, huge cash transfers would serve as a dis-incentive to work; put the economy at risk of overheating with attendant inflationary pressures, as well as, have a high probability of laying down the pre-conditions for the onset of the “Dutch disease,” whose vortex is waiting to gobble up the spoils.
The Opposition forces believe that hefty cash handouts should take precedence over the implementation of transformative development projects in education, health, agriculture, transport, and other sectors. Additionally, do they really care how huge annual amounts of handouts would be sustained in the medium and long term? Given the narrow window of opportunity to exploit this oil resource combined with price volatility of crude oil [between 2020-2023, oil prices fluctuated from US$70 pb (per barrel) to US$111 pb to US$78pb] not only would the risk be too high to consider huge handouts but also such measure would defeat the foundational principles (stated before) of the NRF.
Here are some vital facts for consideration. Oil production commenced on the Stabroek Block on December 19, 2019. From then to September 30, 2023, Liza Destiny FPSO and Liza Unity FPSO produced 283,209,117 barrels of crude oil. The total inflows (royalty and profit oil plus interest) for the period (12/19/2019-9/30/2023) were US$3.135 billion. The government withdrew a combined 51.3% of this sum in 2022 and 2023 US$1.609 billion for budget support in 2022 and 2023 in accordance with the First Schedule and Section IV, paragraph 16(2) of the NRF Act 19 of 2021. The balance of US$1.525 billion as of September 30, 2023, is in the NRF account and not in politician pockets, as recklessly asserted by some critics.
Sincerely,
Dr Tara Singh
