Guyana on course to avoid the Dutch disease – financial analyst
With the recent news that Guyana recorded an increase in non-traditional exports for 2020, one financial analyst believes that the Government of Guyana is well on the way to steering the economy away from a dependence on oil and gas, and from the dreaded Dutch disease.
During an interview with this publication, Financial Analyst Joel Bhagwandin expressed the view that the Government is taking the necessary steps to avoid the Dutch disease. It was only Tuesday that the Guyana Marketing Corporation (GMC) announced that US$12 million in non-traditional goods were exported in 2020.
Bhagwandin, who operates his own consultancy firm, noted that this augurs well for keeping the economy from being overly reliant on oil and gas. According to him, “The Government is on the right path, doing all the right things to avoid that so-called Dutch disease.”
It was pointed out by the Financial Analyst that from the time Guyana received its first oil payment in the Natural Resources Fund to now, not a cent has been touched. That money is presently being banked at the US Federal Reserve. According to him, the Government’s restraint is commendable.
“Dutch disease means when a country relies heavily on one sector and you neglect others. We came out of a period of Dutch disease over the past five years. Oil will not last forever. If you also notice that the Government hadn’t spent a cent from the oil resources, that is sitting in the feds,” Bhagwandin said.
“That is also good, because it’s a good signal on the part of the Government that they are serious about avoiding the Dutch disease, that they have a great grasp and appreciation for how the economy works.”
In a statement to the press on Tuesday, GMC had highlighted that the increase in non-traditional agricultural exports was achieved in spite of the COVID-19 pandemic. The increase encompasses commodities such as coconut water, pepper sauce, achar, sauces, cassava cassareep, and preserved fruits.
In 2020, a total of 9907 metric tonnes of non-traditional agricultural commodities, valued at $2.5 billion or US$12 million, were exported from Guyana. This increase is due to a 20 per cent (8217 metric tonnes) and 44 per cent (419 metric tonnes) increase in the export of dried coconuts and coconut water respectively.
Further, in 2020, Guyana recorded a 110 per cent (2194 metric tonnes) increase in regional exports of non-traditional agricultural commodities. The major regional export destinations in 2020 were Barbados, Trinidad and Tobago, Suriname, and Antigua. Of the total non-traditional agricultural exports, 99 per cent (9805 metric tonnes) was shipped via sea, representing a 14 per cent increase when compared to the year 2019.
Guyana’s sugar industry is another agriculture sector, albeit a traditional one. When it comes to the Guyana Sugar Corporation (GuySuCo), Bhagwandin is of the view that the Government is doing the right thing in trying to resuscitate a corporation that it said was “left for dead” under the previous government.
The Guyana Agricultural and General Workers Union had announced last month that, as at December 13, 2020, over 87,000 tonnes of sugar were produced, a far cry from GuySuCo’s pre-2015 production levels.
“To resuscitate GuySuCo, they have engaged the Indian Government. GuySuCo needs a lot of work, and it will need a lot of capital. Can the enterprise be feasible? Yes, because, globally, sugar is not dead. The global sugar industry is still a vibrant industry, but it has evolved.
“So we have to do the best to resuscitate our industry to an extent where it has evolved in line with the global industry. We need to look at a model to make it an efficient and profitable venture,” the analyst said. (G3)