Fastest growing economy

On June 28, an analysis on the Nasdaq stock exchange website stated that based on a projected growth rate of 16.3% during the period 2018 to 2021, as sourced from the World Bank’s Global Economic Prospects June 2019 data, Guyana had been identified as having the fastest growing economy in the world. Understandably, the impetus for this projected growth was the massive oil discoveries by ExxonMobil in the Stabroek Block with the analysis noting that “Guyana is projected to be among the world’s largest per-capita oil producers by 2025”. Instructively, while the growth figures for 2018 and 2019 were moderate at 4.1% and 4.6% respectively, these numbers skyrocketed to 33.5% and 22.9% for the following two years after oil begins to flow.

Predictably, the Nasdaq analysis drew encomiums from politicians always seeking to capitalise, particularly with elections in the air. The Department of Public Information (DPI) reported the Attorney General Basil Williams SC on July 3rd in fulsome praise at a community meeting. He stated that it was no accident that Nasdaq had positioned Guyana as the economy with the topmost prospects and proceeded to attribute this label to the performance of the APNU+AFC administration of President Granger.

He ventured: “It is almost a miracle that we can be listed as the fastest-growing economy in the world... So, what we have been doing, is that we were cleaning this economy of dirty money. That’s what they [previous administration] were running on. They weren’t running on any legitimate business economy. There was a parallel economy that was operated on underground money, transnational crime money. We became a failed state under that government and so in cleaning the money it frees up the economy and that is how we can talk about being the fastest growing economy in the world.”

On that same day at another community meeting, Minister of Public Security Khemraj Ramjattan was reported by DPI as stating that the Nasdaq analysis “validated this administration’s efforts to build a better country”.

The truth of the matter is that Guyana is positioned where it is in the Nasdaq analysis by virtue of ancient geological formations that have filled offshore reservoirs with hydrocarbons and we must thank our lucky stars that politicians weren’t around then. What should be taken note of by all Guyanese and in particular the politicians who have sought to capitalise on the Nasdaq analysis is that the very APNU+AFC administration has left Guyana severely exposed to what can be the biggest ever rip-off of the country’s resources.

It was this same APNU+AFC government which in recent Article IV consultations with the International Monetary Fund (IMF) confessed that it was concerned that the country’s

Production Sharing Agreement (PSA) with ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL) did not contain sufficient ring-fencing protection, meaning that Exxon and its partners could shift around expenses to constrict the flow of profits to Guyana.

It was the APNU+AFC government which presided over the 2016 “tweaking” of the PSA and which failed comprehensively to hire expert negotiators to ensure that it was equal to the task of negotiating with Exxon and adequately safeguarding the interest of the country, its people and future generations.

To date, aside from the lamentation to the IMF, the Guyanese public is completely unaware of what the government or its Department of Energy will do to rectify the ring-fencing lacuna and a series of other deficiencies? What are they waiting for? Will there be a renegotiation of the PSA? Will there be an attachment to the petroleum licence? Or will we get on bended knees and ask Exxon to be sorry for us? As the Minister with responsibility for petroleum, President Granger should speak forthrightly on this matter and should say who should be held responsible for the deficiencies in the PSA and how these losses to the country and its future generations will be made up. A thorough assessment by industry experts of how much this country has lost in poor negotiating of its oil deals could possibly run into the billions of US$ given the scale of the discoveries in the Stabroek Block.

Ring-fencing is only one of a number of serious pitfalls. While government officials are traipsing from one international conference to another talking up the country’s prospects to legions of venture capitalists and prospectors whose overwhelming objective will be to cream off the maximum from the country’s oil wealth, Guyana and its people remain vulnerable and ill-prepared for what is to come.

This has been exacerbated by the APNU+AFC administration’s refusal to accept the straightforward

outcome of the December 21, 2018 motion of no confidence in the National Assembly and its embarking on hopeless and costly challenges all the way to the CCJ simply to preserve office instead of seeking renewal of a five-year mandate and giving a new government the opportunity to pilot in Parliament the raft of crucial laws and policies to secure the interests of the country.

Consequently, a virtual six-month limbo has ensued in which the government’s authority remains under challenge, the status of parliament is questionable and the political atmosphere is toxic, ruling out the prospect of needed unanimity on oil and gas. All the while, pressing issues which have been on the agenda literally for years such as the Petroleum Commission, local content policy, a depletion plan and environmental and insurance safeguards remain unaddressed. The controversial passage of the Natural Resources Fund bill in January this year will likely invite further challenges and to date there is no sign of the swift composing of its various components. There are also robust views that the government must press EEPGL for an improved royalty rate and for enhanced provisions related to the Stabroek Block.

This disorder and political toxicity aids only the hordes of oil companies and investors eying Guyana’s riches. So while the government can hardly claim any credit for Nasdaq’s prognostications, it must be held fully responsible for the vulnerabilities to which it has exposed the country. Petroleum sector policies and laws should be driven by political consensus. Both sides of the equation should strive for this in the coming months notwithstanding the ongoing instability.