WPA’s unsubstantiated figure of US$5000 is totally bogus

Dear Editor,
I refer to a letter in a section of the media on October 18, 2019, captioned “The poor are invisible to the critics of cash transfers” written by David Hinds. While this idea from the WPA is something to reflect upon, the substance of the cash transfer models lies in the details.
Mind you, I am not saying the idea is not a good one. I am on record recommending conditional cash transfers, albeit on a more economically feasible scale. At that time, my brand of conditionality placed a fixed cap of US$90 million on cash transfers being made to every tax registered resident of Guyana. I also advocated at that time for these expenditures to be only payable for long term investments in oneself like housing, education, transportation assets, etc rather than on rum and other consumables. Plus I applied an additional conditionality that you must register with the GRA for a TIN Certificate to ensure that the GRA and NIS have you on their radar.
The way this model works is that if you repair your house (as an example), you can apply to a new Cash Transfer Unit in the Ministry of Finance for reimbursement up to your cash limit. Once the investigators confirm that these were bonafide purchases, the funds are transferred to a bank account of your choice. This does four things – puts everyone into the banking system, on GRA’s radar, in the NIS database and finally allows for cash to be transferred directly to the population.
These cash balances are accumulative and can be withdrawn anytime. A child born in 2025 will automatically receive his cash transfer in his account because every Guyanese has to register at the GRA from birth. So by 2030, this child will have five years’ supply of cash available to pay for his education. At the retirement age of 65, whatever balance is left in your account, you will have the power to withdrawals any parts of it from the scheme for any purpose whatsoever (no conditions for the retirees).
Since my interview with a section of the media, much has changed on the discovery front and the computations have evolved to a new distribution level of about US$400 million a year, which computes now to about US$600 per year per person starting in 2025. But this number is at great variance from the WPA’s proposal of US$5000 per year per household.
If one is to read the Demerara Waves of September 29, 2019, it reported: “Thomas proposes to transfer 10 per cent oil revenues to households”. Using his statistics, he declared that there are approximately 210,000 households in Guyana. Is he saying each household will get one oil check per year? How fair is that if one household has 2 persons whilst the other has 8 persons? Which one is needier than the other?
I have used the only credible data that I have seen on Guyana’s revenue stream from the oil sector (a comprehensive study done by Rystad). They had three estimates and in my world when you are doing financial planning, you pay attention to the most conservative option (in this case, an oil price of US$50 per bbl). Based at that level, Rystad found in August 2019, that Guyana will get closer to US$58 billion in profit oil over the next 20 years commencing in 2020 and peaking around 2033. Of course, this projection from Rystad is subject to change as more wells are discovered. But my elders always thought me, do not count your chickens before they hatch, so I shall stay grounded in the current data until more discoveries are made.
Using the Rystad data, the computation illustrates that at the conservative level of US$50 per bbl, if 10 per cent of the oil wealth is distributed to 210,000 households starting in 2025, only US$1904 per year is available for distribution. Yet Clive Thomas spouts a figure of UDS$5000 per year. (see table below)

Of course, the WPA argues that their estimated price for oil will be US$70 per bbl. But when I review the just-released EIA projections, the conservative oil price by 2030 will be below US$50 per bbl and this makes sense considering the rapid increase in available renewable energy options. So even this computed number of US$1905 using the WPA model seems high.
What this entire exercise has revealed is that this WPA’s unsubstantiated figure of US$5000 is nothing but a “voodoo” number; totally bogus. This US$5000 number was designed as a cheap political trick to game the system as the silly season commences whereby the WPA seeks relevance as the PNC continues to assert itself in that group called the APNU. At least the more mature political parties (PPP and PNC) have rejected this insanity and have put out a more reasoned position on conditional distribution.
I look forward to the reasoned positions on this debate.

Regards,
Sasenarine Singh