Girdhari’s point that oil will not favour Guyanese is shocking

I write with reference to Dr. Gary Girdhari’s Letter to the Editor published in Stabroek News (October 30, 2022). I hold Dr. Girdhari in high regard and welcome his critical engagement. I will highlight each point made by the writer and offer my response.

Girdhari begins by saying that all contracts are contracts regardless of geographical location. He is correct but only in a nominal sense, in the same way one can say water is the same everywhere. More injurious than the circularity just noted, is the fact that my point concerned cultural attitudes towards contracts, not the form or contents of existing contracts. The error is obvious and warrants no further comment.

Dr. Girdhari makes two related points about foreign investments. The first is that “thus far, Guyana has not been better because of foreign investments,” and secondly, that “there is no evidence that big oil would favour

Guyanese.” With respect to the former, we are told that “Alcan, Bookers, Barama, Omai come to mind readily,” as ‘evidence’ of the failure of foreign investments.

You will note that not a shred of evidence is offered by the writer for this sweeping claim. Surely, as Guyanese we all know that Alcan and Bookers brought in significant foreign exchange to Guyana and employed thousands of our citizens. Omai is a more complicated case, and I will have to deal with that in a follow up article. For now, what I can say from direct contact with senior people in the gold industry (November 1, 2022) is that there is an aggressive exploration programme currently underway with more than two million ounces of proven reserves confirmed. The mining construction phase will see US$ 1B and will employ 1200 Guyanese. The operating phase will employ 1000 of our people.

Girdhari’s point that oil will not favour Guyanese is shocking for the simple reason that the 2022 projected growth rate for Guyana by the IMF and other independent sources is between 57%-60%. By contrast, the global growth rate for 2022 according to the IMF is 3.2% and will drop to 2.7% in 2023 (IMF, October 2022). The oil sector will contribute US$ 1.1B in foreign exchange to Guyana by the end of this year.

While I understand the general concerns expressed by Dr. Girdhari, I must also surmise that his fears are more a matter of 1970s ideology, locked as it were in economic nationalism vis a vis foreign capital, and economic populism on the domestic (fiscal) side of things. The only reasonable inference to be drawn from his arguments is that we should shut out capital inflows and return to some version of import substitution ‘industrialization.’ Numerous countries tried that and failed.

In closing, please allow me to share some relevant data on FDI. “According to UNCTAD’s annual report in 2018, the ratio of global FDI stock to GDP increased from 9.58% to 39.24% during 1990–2017. This ratio increased from 9.32% to 43.79% in developed countries and from 12.86% to 32.58% in developing ones.” Finally, the World Investment Report found record levels of FDI in Asia, Africa, and Latin America in 2021, totaling US$619B, US$83B, and US$134B respectively (UNCTAD, 2022).

With this kind of FDI dynamic on a global scale, why should Guyana, a country historically starved for sizable capital inflows, take a back seat? Please explain the rationale, without resort to ideology or ‘taste.’