Media Advisory: Transforming Guyana Season II, Episode IX, Guyanese fiscal policy in the era of Oil & Gas

Program 

Speakers:

• Samuel Braithewaite, Lecturer, Department of Economics, UWI Mona
• Thomas Singh, Director of the GREEN Institute & Senior Lecturer, Dept. of Economics, University of Guyana
• Collin Constantine, Assistant Professor and Official Fellow of Economics at Girton College, Cambridge
• Bright Simons, Founder of mPedigree and Vice President at IMANI Africa
• Justin Ram, CEO, Justin Ram Advisory Associates
• Anthony Bryan, CPC Co-Chair & Fellow, Senior Fellow, Institute of International Relations, UWI
• Terrence Blackman, Founder, Guyana Business Journal

Quotations:

Samuel Braithewaite, Lecturer, Department of Economics, UWI Mona

• “When I think of fiscal policy in Guyana, my mind turns to institutions…To avoid the resource curse, we have to be very careful with regards how we deal with institutions, how we deal with the rules of the game.”
• “When we talk about economic growth and GDP and so on, economics is about people. If you’re unable to show how all these lofty growth rates are contributing to an improvement in people’s lives, then you’re not doing right by them.”

Thomas Singh, Director of the GREEN Institute & Senior Lecturer, Dept. of Economics, University of Guyana

• “The question arises, ‘What are our sources of sustainable growth?’ What if our oil disappears? Would we have the human capital to replace that oil? Have we been investing in technology?”
• “Guyana has been running an overall balance payments deficit…It is probably one of the reasons why we aren’t noticing an increase in the Bank of Guyana net foreign assets because [the Bank of Guyana] has to be using up international reserves to meet the deficit.”

 Collin Constantine, Assistant Professor and Official Fellow of Economics at Girton College, Cambridge

• “If we want to understand the fiscal position of any government with oil discovery, we need to look at the non-oil primary balance as a share of non-oil GDP.”
• “There are well-known institutional constraints in countries like Guyana. Ultimately, whether we have oil wealth or not, fiscal policy should aim for neutrality on banks’ diversification ratio, the change in government deposit balance at the central bank or the monetary base,  the foreign exchange market, and Central Bank independence (end Bank of Guyana financing of the deficit).”

 Bright Simons, Founder and President of mPedigree

• “I subscribe to the “institutional imagination” viewpoint. There are so many different ways a society like Guyana can organize its natural resources, including petroleum. No policy or regime is cast in stone as far as best practice is concerned. Regardless of development level, all countries grapple with this heterogeneity of best practices. Guyana needs to have the moral and intellectual courage to interweave the best ideas from all over to create its own best-fitting, optimal vision.”
• “You [Guyana] are already fighting over cost accounting issues, just a few years after the onset of first oil. That already tells me that there is massive room in Guyana to learn from us, peer countries near and far, who have been dealing with this “cost oil” and “profit oil” issue for eons around the world. We have tremendous experience with these issues – from base erosion and cost inflation to profit shifting and value attrition, name it, we have seen it all.”

Justin Ram, CEO, Justin Ram Advisory Associates

• “Guyana’s economy is primarily driven by the rapidly growing mining and quarrying sector…Specifically, the oil and gas sector since the discovery of substantial oil reserves offshore Guyana in 2015 and 2018.”
• “In all other types of economic activities, we find most value added is distributed to workers as wages and to owners as profits. However, when it comes to oil and gas distribution of rents within the country, those rents go first to the government who will then need to redistribute them through public spending.”
• “Guyana is in urgent need of intensive investment in public infrastructure, particularly in areas such as roads, electricity and clean water. I think with the oil and gas resources, this can be a way for the government to spend those in a way that provides efficiency and helps facilitate economic activity in other sectors.”
• “We need to focus on how we drive sustainable development through the efficient use of the revenues coming from the depletion of oil and gas resources so that we maintain, and indeed grow the country’s capital base.” Investing in human capital is critical, i.e., education and health investment, combined with a competitive economy so that individuals can turn their investment into tangible rewards (sustainable income, consumption).”

 Anthony Bryan, CPC Co-Chair & Fellow, Senior Fellow, Institute of International Relations, UWI

• “Guyana is at a crossroads at this point. This is really the crux of how Guyana goes ahead.”
• “Accelerated fiscal expenditure will increase domestic inflationary practices, potentially creating a great deal of stress within the Guyanese environment and internationally.”
• “Guyana can learn from the mistakes, or the successes, from others that went before.”

 Terrence Blackman, Founder, Guyana Business Journal

• “We want to improve economic, social and security conditions, creating more equitable and diverse opportunities for all Guyanese. And ensure a harmonious, resilient and flourishing Guyana where every citizen benefits from its economic growth – regardless of background or beliefs.”
• “In this era of significant economic transformation, particularly in the burgeoning oil and gas sector, Guyana stands at a really crucial juncture. The dynamics of fiscal policy within this evolving landscape present profound challenges and remarkable opportunities.”
• “You have these [oil and gas] rents go to the government. The government has to redistribute them, but it has to redistribute them in an economically sound, stable, sustainable manner. And how do you do that? That’s the question we are trying to answer.”