Guyana urged to be financially prudent with oil gains

 

Guyana is being urged to make prudent decisions, as its economy repositions with oil and gas as major economic drivers.

 

The remarks were made by Chairman of the Jamaica Stock Exchange Steven Whittingham, at day one of the JSE's 2nd Regional Investments and Capital Markets Conference in Guyana.

 

Guyana is now positioned as an important player in the global oil and gas market, with more than 11 billion barrels of oil reserves, and production of more than 600,000 barrels per day.

 

This "Black Gold" has already started to revolutionise the country's economy, as it continues to lead economic growth in the Caribbean region.

 

It's also one of the fastest growing economies in the world.

 

But as the country repositions, it's being urged to not make the same mistakes as Jamaica. 

 

"In the heyday of bauxite and alumina in Jamaica, Jamaica boldly and controversially introduced a bauxite levy regime, which led to the accumulation of a considerable amount of capital, which was isolated from the Consolidated Fund and placed in a special fiscal vessel called a Capital Development Fund. This Capital Development Fund was intended to be the spinal column of our economy, and it was supposed to constitute healthy reserves that could weather any storm," Mr. Whittingham recounted. 

 

But the approach was not successful. 

 

"Rather than carry out far-reaching prudential reforms, the Capital Development Fund in Jamaica became absorbed in her current expenditure. As recently shared with me by Jamaica's outgoing Minister of Finance, Dr. Nigel Clarke, US$2.5 billion later, the funds from our bauxite levy are gone. So the decisions that we made in the past in Jamaica rocked the foundation of our economic independence, and it has taken us 30 years to recover our balance," he reasoned.   

 

He warned that Guyana must "be careful not to fall into the similar self-created trap", and instead be financially prudent to ensure the gains from oil will trickle down for years to come.