Home News Expenditure must be guided by fixing Guyana’s financial status – Gaskin
Even as Guyana gears towards setting up the appropriate framework to govern the emerging oil and gas sector, there is much debate on what use will be made of these funds.
During a recent interview, Economist Ramon Gaskin had some suggestions to make about some priority areas that the Government ought to use the upcoming finances to fix.
“I think there are about five things this money should be spent on,” Gaskin said. “Twenty per cent should go towards paying down the national (external) debt. The debt is about US$1.8 billlion. We have to deal with it.”
“Next, 20 per cent should go towards the national annual budget, to reduce the capital and the current deficit,” the economist argued. “Twenty per cent should go towards a stabilisation fund, to cater for fluctuations in case the price of oil goes right down.”
Gaskin also advised that a percentage go towards the national reserves. He advocated for the building up of reserves- in gold.
“Twenty per cent should go towards using, not cash reserves but gold reserves we have to build up. We have a lot of gold produced in this country and we sell this gold overseas,” he said.
Guyana has enjoyed a good relationship with other, more powerful countries that have allowed it to benefit from money, including grants and loans for infrastructural projects, he noted, added that how well a Government can manage its external debt portfolio is regarded as an indicator of good governance and a stable economy.
Worry has also been expressed about where the price of oil will stand by the time ExxonMobil is ready to begin the commercial production of oil. The price of oil is currently US$45 per barrel, but industry experts are wary of the stability of this price.
One surety against economic fluctuations is gold reserves, intended to provide support should the monetary value of a country’s currency drop. It has often been the case that countries facing economic trouble would buy and horde gold in large quantities.
But experts have warned that priority projects for Guyana when oil revenues come include fixing the disparity in social services when compared to other countries. This includes provision of medical services to the population.
It was recently announced that Government has sought the assistance of the International Monetary Fund (IMF) to provide technical assistance in capacity-building, to manage the resources.
A team from that international financial institution was on Tuesday introduced to Cabinet by Finance Minister Winston Jordan. The team leader informed Cabinet that Guyana has become eligible for assistance from the IMF under a donor-funded trust fund.
The team will also make an assessment of Government’s policy direction and meet with agencies and persons that would be responsible for managing the oil and gas sector, to enable it to determine the areas in which assistance could be provided.
Since news of the oil find was made public, much advice intended to prevent Government from being afflicted by the “oil curse” has been pouring in, and Guyana has repeatedly been warned to be careful with the use of the revenues that would flow from this promising sector.