Former Minister of Government, Geoffrey Da Silva is warning Guyana not to fall prey to the Dutch oil curse by borrowing money from future oil sales.
Da Silva briefly served with the Trade, Tourism and Industry portfolio under former President Bharrat Jagdeo, and later as Chief Executive Officer of the Guyana Office for Investment (GO-Invest), and until a few years ago as Ambassador to Venezuela. He made his urgent warning in a recent letter to the editor.
He said that Guyana ought not to meet a point at which it is so over-dependent on oil income for its revenues that its public spending becomes unrestrained and it is betting on the arrival of money from oil it plans to sell.
He acknowledged the need to build resilient public infrastructure, but explained that as Guyana is currently the sixth poorest of South American and Caribbean nations, it must plan its economy carefully, as a failure to do so could yield disastrous consequences.
He noted low foreign debt and a decreasing debt-to-GDP ratio as one of the hallmarks of good governance.
Da Silva’s comments come at a time when Guyana’s non-oil economy is suffering.
Vice President Bharrat Jagdeo had revealed earlier this month that Guyana’s non-oil economy is in recession, registering a shrinkage this year of 4.9 percent. He had said that the Government would look internationally for assistance to revitalise the economy.
Guyana has constantly been bombarded by international banks and other financiers with offers of loans. The situation was noted in January by former Finance Minister, Winston Jordan, who told Reuters that international entities would talk at meetings of how much they can lend.
“At the IMF meetings, I was bombarded, at the IDB meetings, I’m bombarded with people telling you how much money they can lend you,” he is quoted as saying, in reference to the International Monetary Fund (IMF) and Inter-American Development Bank (IDB).
Jordan had said that the offers go as high as US$500B and US$2B. Commenting on the situation, Da Silva noted and concurred with statements by Jagdeo on Kaieteur Radio that the country must not be a victim of the “Dutch Disease”.
Da Silva added that one of Guyana’s greatest challenges will be to build a diversified economy with its oil industry.