The reports being pushed by the APNU+AFC Coalition controlled state media about an 86 per cent growth in Guyana’s Gross Domestic Product (GDP), because of the developments in the oil and gas sector, fail to convey a true and accurate picture of what the future holds for the Guyanese people, according to Opposition Leader, Bharrat Jagdeo. The 86 per cent GDP growth projection is attributed to the September 17, 2019 report from the International Monetary Fund (IMF). According to the report, projected real GDP growth is estimated at 85.6 per cent.
The economist, a former president and finance minister, when pressed on the matter by the media recently explained that developments in the oil and gas sector advance in an enclavic way – meaning that it does not automatically translate to an increase in job creation or linkages with the rest of the economy or even massive revenue flows to the treasury. “I’ve seen another set of so-called positive news which says the gross domestic product (GDP) of Guyana will increase by 86 percent next year and within, say five years, we can triple the size of our economy…that sounds really good…but does it mean it’s all great news for Guyana?” Jagdeo questioned.
He added, “The oil and gas sector is one of those sectors that is capital intensive… this oil that is produced – if it’s going to triple the size of our economy, there is an assumption that the revenue to the State will also go up three times. So if we’re collecting a billion dollars now, maybe we will collect three billion dollars then in revenue because somehow, there is this mistaken view that there is a correlation between this growth and revenue to the treasury.
“…we could possibly see a steep growth in our Gross Domestic Product, but we have lost 30,000 plus jobs we lost already…with oil and gas we’re only going to get maybe four or five thousand new jobs…we will be net worse off in terms of jobs even if the economic growth is high.” According to him, there must be a holistic view of the state of affairs.
MANAGING THE RESOURCE
The Opposition Leader underscored the fact that an 85.6 per cent projected growth rate, as a result of the oil and gas sector, can only be meaningful if an enabling environment is created to ensure that the success of the oil and gas sector is capitalized on to bolster the rest of the economy and used to advance sustainable development.
Notably, according to a July 2019 report from the United Nations Conference on Trade and Development, titled ‘Establishing development linkages in the extractive industry: Lessons from the field’, “Underdeveloped linkages with the broader economy, as a result of the enclave and capital-intensive nature of the extractive sector, lead to the sector’s limited contribution to job creation and economic diversification.
“…to mitigate this vulnerability, Governments need to build and strengthen linkages between the extractives sector and the rest of the economy. This will help to overcome the enclaves that often form around extractive projects and foster economic diversification.” Jagdeo said, “They are talking up the numbers without addressing how and if that growth will translate to greater benefits for Guyanese…every time I see people talk about the numbers, I see the facts missing.”
It must be also noted that while, the report also stressed that while oil production is expected to commence soon and will bolster medium and long-term economic outlooks, there can only be positive advanced is the oil monies are well managed. “Oil production is expected to commence in early 2020, and additional oil discoveries have significantly improved the medium- and long-term outlook. This presents a momentous opportunity to boost inclusive growth by addressing human development needs and infrastructure gaps, provided the oil wealth is managed well,” the September 17, 2019 IMF report said.
