Monday was budget day in Guyana. Also known as party time. Finance minister Ashni Singh plans to spend 41 per cent more than he did in 2022.
He can afford to. He has a one billion US dollar transfer from Guyana’s Natural Resource Fund to play with. Tax revenues are up. On top of that, he’s planning a budget deficit equivalent to 11.5 per cent of Guyana’s soaring economic output. And at the start of the year, he announced US$364 million Chinese borrowing to pay for a new bridge over the Demerara river and an East Coast highway.
Singh increased pensions by 18 per cent. Public servants have just had an eight per cent pay increase. The private sector minimum wage went up 36 per cent in July – though it’s still under TT$2,000 a month. Tax on gas and diesel has been cut to zero.
Guyana’s economy was the world’s fastest-growing last year, with output up 62 per cent. And it’s not just oil. The non-oil economy was up by 12 per cent. Bauxite is rebounding. Gold prices are peaking again. Diamonds are sparkling. There’s a new manganese mine. And the government has spent US$50 million in two years trying to revive the moribund sugar industry, with another US$20 million to follow this year.
Construction boomed by 26 per cent. Says one city dweller: “Georgetown is one big construction site.” There’s talk of importing aggregate from Canada. Cement importers sell stock faster than they can reorder. Plumbers and electricians charge a hefty “consultation fee” to even look at a job. And traffic? Wall-to-wall SUVs block the Georgetown roads.
When I first went to Guyana in the mid-1980s, basic foods like cheese, potatoes or wheat flour were unobtainable. A scatter of ancient Austin and Morris taxis sputtered the roads. Guyanese hunted every possible route to work overseas.
A glitzy Georgetown restaurant now does a brisk trade in steaks at TT$2,250 a throw. Champagne sales are bubbling.
Not everyone is laughing though. Vegetable prices doubled last year; eggs are up almost as much. Stabroek News publishes heart-wrenching weekly vox-pop features highlighting the struggles of the rural and urban poor.
From a standing start in 2020, oil output reached 233,000 barrels a day in December last year, with 560,000 expected by December 2023. That would be around ten times T&T’s output. By 2027, ExxonMobil and partners expect to reach 1.2 million daily barrels.
Reserves are now over 11 billion barrels, with new finds still stacking up, and a bid round closing in April. There’s 17 trillion cubic feet of gas, earmarked for a new power plant to fix Guyana’s ongoing power supply woes. A small oil refinery is proposed, for completion in 2025.
T&T businesses such as Ansa McAL, Massy and Republic Bank are poised to share Guyana’s prosperity. So are a clutch of smaller energy sector enterprises.
In a few more years, will we have a Caribbean Dubai or Abu Dhabi? Even allowing for leakages to waste and corruption, there will be plenty cash for the useful stuff.
While Guyana pumps oil, the world is in climate crisis.
The big threat to Guyana is steadily rising sea levels. Most Guyanese live in the coastal strip, at or below high tide. Critical sea defences are already at risk.
By July, the US gives a 64 per cent chance of an El Niño weather pattern. That means searing drought for Guyana – following three years of heavy rain and flooding from the inverse La Niña pattern. An unstable worldwide climate is making these swings sharper and more damaging.
Drought and deforestation have pushed Amazonian and Guyanese rain forests close to an environmentally disastrous tipping point.
Guyana’s ultra-influential vice president Bharrat Jagdeo was executive president from 1999 to 2011. In 2009 he announced a Low Carbon Development Strategy, to include international payments for the carbon-absorbing impact of forest conservation. An updated version launched last year also takes in biodiversity conservation, fresh water, and the ocean economy. That requires careful management.
Guyana was given 33.5 million carbon credits last year for not cutting down its trees, with more to come. ExxonMobil’s offshore partner Hess in December agreed to buy one third of these credits, paying US$750 million over ten years; 15 per cent of those funds will go to Village Sustainability Plans for Amerindian settlements in the forested interior.
With construction booming, Guyanese forest exploitation for timber grew 13 per cent last year. The government hopes it will increase further, with the first stage of a new road to Brazil easing forest access.
Internationally, research published this week strongly questions the validity of many forest conservation carbon offsets.
Recently unearthed documents show that Exxon’s scientists accurately predicted the impact of oil extraction on the world’s climate as early as the 1970s. UN secretary general, António Guterres said on Tuesday that “fossil fuel producers and their enablers are still racing to expand production, knowing full well that their business model is inconsistent with human survival. This insanity belongs in science fiction.”
After centuries of hardship, it’s hard to begrudge the Guyanese their oil boom. In T&T, we’re familiar with the upsides and downsides. Yes, it’s a development strategy. But Low Carbon? Maybe not.
THE AUTHOR is an international
journalist based in Port of Spain