Guyana prepares fiscal plan to avoid resource curse

Guyana is in the process of designing a dedicated fiscal framework with prioritised clear objectives to be put in place before oil production starts in 2020.
According to Finance Minister Winston Jordan, the Guyana Government is looking to “adopt a coherent macro-economic management strategy that fosters economic growth and sustainable development outcomes”.

Jordan made these comments at the opening of a two-day seminar hosted by the Chatham House’s New Petroleum Producers Group. Oil revenues provide a “golden opportunity” to reverse “centuries of mis-development”, the Minister noted. Guyana has been continuously warned that if it does not properly manage its oil revenues, it could retard economic development. This is commonly known as the resource curse. Oil revenues will be used to invest heavily in core traditional sectors to reduce full dependence on oil to sustain the economy, the Minister said.
According to a Government Information Agency (GINA) release, Minister Jordan explained that Guyana will also rely on a Sovereign Wealth Fund (SWF) to guard against the resource curse. “We will ensure that the elements of this fund are compatible with the developmental objectives of the Government,” he said. Guyana’s draft SWF was created with input from the Commonwealth Secretariat, and has since had input from other international agencies, including the World Bank. The Government is looking to have the SWF in place before Guyana’s first oil.
Meanwhile, the Minister emphasised that there has to also be management of domestic expectations in tandem with the resources. “People are already calling (asking) when we are going to start distributing money, so it is extremely important that we are able to manage domestic expectations,” Jordan said.
The Ministries of Natural Resources and Finance along with country representatives from Trinidad and Tobago are participants in the two-day seminar, which will examine mechanisms for saving petroleum revenues.