Govt working to mitigate threats to rising prosperity – Jagdeo tells int’l forum
…highlights policies to manage oil resources, avoid Dutch disease
Noting that Guyana faces numerous threats to its growing economic wealth, Vice President Bharrat Jagdeo on Tuesday night told an international forum that all efforts will be deployed to ensure the country prospers in the years to come.
The Vice President was fielding questions during an event organised by the Baker Institute Center for Energy Studies under the title “Climate Change Aspirations and the Viability of Small Developing Countries: A conversation with the Honourable Dr Bharrat Jagdeo, Vice President of Guyana.”
Asked what is the biggest threat to the country’s growth and prosperity, Jagdeo listed a number of factors including climate change, human smuggling, and drug trafficking.
On the issue of climate change, he pointed to the 2005 floods which wiped out the equivalent of 60 per cent of the country’s Gross Domestic Product (GDP). He then highlighted that the country continues to face climate change-related threats, making reference to the recent floods which affected all regions of Guyana.
Another major threat highlighted by the Vice President is that posed by Venezuela. “Venezuela has had its eyes on our territory for a very long time,” Jagdeo noted. He explained that the Guyana-Venezuela border controversy case is currently before the International Court of Justice (ICJ) and expressed hopes that a favourable resolution will be reached soon.
“Thankfully…we have peace on our borders,” he added.
“So, these are threats that are there constantly, when you’re in Government, you have to tackle all the time. But I think, overall, I think we can mitigate those threats and ensure that our country keeps accumulating wealth,” Jagdeo expressed.
Oil resources management
The Vice President also addressed the issue of the country’s oil resources, noting that they will be “judiciously managed”.
According to the former Guyanese Head of State, the management of these resources would require “a lot of fiscal discipline and transparency”.
This would require significant legislative reform, the Vice President said as he explained that the country’s existing Petroleum Act was passed since 1986.
“So, we’re busy working to ensure we have a modern Petroleum Act,” Jagdeo said.
He noted too that efforts are underway to create an improved Natural Resource Fund.
“[It must be] structured in a way where it keeps politicians at arm’s length in a model similar to Norwegian model,” Jagdeo explained.
He pointed out that so far, all of the resources from the country’s profit oil and royalties have gone into the Fund which has not yet been touched. He noted too that every time the country gets a new payment, it is announced so the nation can be informed. Guyana has so far received payments for seven oil lifts and the current sum in the Natural Resource Fund stands at US$436 million.
Jagdeo explained that his Government has made several commitments surrounding the transparent management of the oil sector, including the criminalising of non-disclosure of money received from oil companies. In this regard, he noted that laws will soon be enacted to make the Finance Minister liable for significant jail time for failing to make such disclosures.
Moreover, he noted that laws will come into force to ensure that the use of money from the Natural Resource Fund must be publicly known and debated in the National Assembly.
Regarding the remaining oil blocks, the Vice President reiterated that they will be given out through a competitive bidding process.
With the right management of these resources, the Vice President is confident that the country can avoid the Dutch disease and provide improved lives for every citizen.
He said the Government’s aim is to manage the oil resources in such a manner that it creates generational wealth.
“We don’t see ourselves wealthy as yet…the magnitude that will see major flows to Guyana is now coming for the next few years,” he posited.
“We still have US$300-US$400 million a year now. It’s not a lot of money and many people will think that the wealth will come tomorrow or that it’s here today and suddenly we have to start splurging…[but] we have to live within our means for quite a while into the future,” he explained.
Jagdeo also emphasised that the oil resources will be used to improve the quality of healthcare offered in all regions of the country, offer first-class education to the citizens, enhance public infrastructure, and invest in the non-oil economy.
“The resources must help us to do two things, to keep the economy diversified – the non-oil economy, so that the wealth created in this short period could continue to grow…and used to ensure we create enough opportunities in other sectors of the economy; agriculture, ICT, tourism, etc that can continue to generate wealth for the future for our people,” he noted.
Jagdeo said the goal is the have the country’s non-oil economy generating as much wealth as the oil economy.
On the topic of energy, the Vice President noted that Guyana can balance its status as an oil-producing State while honouring its global commitment to fight climate change.
In this regard, Jagdeo explained that the oil resources will help the country in its energy transition which will include a mixture of natural gas, hydro, solar and wind power. Moreover, he said this combination can drastically reduce the cost of electricity in the country – which is one of the highest in the region.
Meanwhile, he acknowledged that the country’s oil and gas industry will result in increased emissions.
“Oil and gas will bring increased emissions and the regulatory agencies and these companies will have to start looking at cutting-edge technology that are less polluting and we’ve had that discussion with them already and there is a serious effort to address this,” Jagdeo said.
He noted too that “globally, we still believe that you must remove the subsidy from exploration and fossil fuel. We believe in a carbon price…we believe that you need a proper carbon price to cause the massive transformation and the investments and the right signals globally.
Moreover, Jagdeo said he believes the country can achieve all these objectives. “Our crude is light, sweet crude which is cheaper and less polluting than crude that is produced anywhere in the world…”. (G11)