Making the best of Guyana’s economic boom

By Dr Compton Bourne

Professor Emeritus in Economics, The University of the West Indies and former President, Caribbean Development Bank

Guyana is on the cusp of an economic boom based on the commercial production and marketing of its petroleum energy resources. The challenge before the country now is to make the best use of the opportunities presented by the imminent boom. The quality of the outcome will turn upon the quality of management in government, in business enterprises and in households.

Let me begin with government. There is a conventional view that governments should follow a king of annuity rule which smooths expenditures over a defined long period of time. Most of current fiscal resources would thus be saved to finance deferred expenditures. This principle would only be valid if the economy is already well endowed with capital and wealth and is growing sustainably. This is not the case in Guyana, which starting from a low base of economic capital (including infrastructure and business plant and equipment), wealth and national income, is better advised to utilise its fiscal windfalls to put the economy on a higher growth path than would be feasible in the absence of an enlarged public purse. Government spending directed towards improvements in community health, better social and productive infrastructure, more efficiency in the delivery of public services, and social stability can positively influence national productivity and investment, business opportunities and business income, household employment and household incomes and wealth. But for these benefits to accrue expenditures must be carefully planned and implementation must be tightly managed.