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If oil prices collapse, Guyana can find itself in a serious debt crisis Jul 31, 2024 Features / Columnists, Peeping Tom Kaieteur News – In the early 1990s, the People’s Progressive Party (PPP), then in opposition, was vocal about Guyana’s staggering per capita debt, one of the highest in the world at the time. They criticized the then-government for making Guyana one of the most highly indebted countries in the world per capita and for having an unsustainable scheduled debt servicing. At the time the external debt was a mere US$2.1b but given the country’s small population this translated to one of the highest per capita debt burdens in the world at the time. Scheduled debt servicing also exceeded 100% of revenues. The PPPC highlighted this burden as a major campaign issue in the 1992 elections, which they subsequently won. Today, however, the situation has taken a paradoxical turn. While the per capita debt has risen to levels even higher than in 1992, the current PPP/Civic (PPPC) government appears less concerned, choosing instead to focus on favorable metrics such as debt servicing and the debt to GDP ratio. This shift in rhetoric and metrics is risky, particularly given the volatile nature of the global oil market, upon which Guyana’s economic future heavily depends. The crux of the current administration’s argument lies in the favorable debt servicing and its rising GDP. With oil revenues contributing significantly to the national economy, the country has seen a surge in GDP, which has helped manage debt servicing more comfortably. However, this approach overlooks the fundamental issue: the sheer amount of debt per capita that every Guyanese citizen is burdened with. As the country’s debt continues to rise, so does the individual share of that debt, which could spell disaster if the global economic conditions change unfavorably. One of the most significant risks facing Guyana’s economy is the potential for a sudden and severe drop in oil prices. The history of oil-dependent economies is replete with cautionary tales. Venezuela, once a wealthy nation due to its vast oil reserves, experienced an economic implosion when oil prices plummeted. The reliance on oil revenues, coupled with high levels of debt, led to a catastrophic economic collapse that plunged the country into a severe crisis. Guyana, now an emerging oil producer, faces a similar risk. If oil prices were to fall to levels below US$20 per barrel, the country’s economic situation could become dire. This is why Jagdeo’s current emphasis on debt service-to-revenue and debt-to-GDP ratios and G can create a false sense of security. While these metrics are important, they do not paint a full picture of economic health. High GDP growth can be misleading if it is heavily reliant on a single, volatile industry. In Guyana’s case, the oil sector’s contribution to GDP is significant, but so too is the risk that comes with it. Should oil prices collapse, the revenue streams that currently seem robust could dry up, making debt servicing increasingly difficult and putting the country at risk of default. Given these risks, the PPPC government needs to exercise caution in contracting new debt. While borrowing to invest in infrastructure and development can be beneficial, it must be done with a clear understanding of the potential future economic risks. The current favorable debt servicing ratios are contingent on sustained high oil prices. However, history has shown that oil prices are subject to significant fluctuations due to a variety of factors, including geopolitical tensions, changes in global demand, and advancements in alternative energy technologies. In 1985-86, oil prices collapsed from around $30 per barrel to below $10 per barrel. The global financial crisis of 2008-2009, led to a sharp decline in oil prices, which fell from a peak of about $147 per barrel in July 2008 to around $32 per barrel by December 2008. Oil prices dropped from over $100 per barrel in mid-2014 to below $30 per barrel in early 2016. During the pandemic prices plunged from round $60 per barrel in early 2020 to as low as $20 per barrel in April 2020. By now Jagdeo ought to know that lowering per capita debt is important even in the context of rising GDP and lower debt service payments because it directly impacts the financial burden on individual citizens and the country’s long-term economic stability. High per capita debt can limit the government’s fiscal flexibility, making it challenging to respond to economic downturns or unforeseen crises. While a growing GDP and manageable debt service payments may suggest economic health, they do not account for the potential volatility of revenue sources, such as oil. Should a downturn occur, the higher the debt burden per citizen, the more severe the consequences, including possible austerity measures, reduced public services, and increased taxes. Therefore, reducing per capita debt helps ensure that economic growth benefits are more equitably distributed and sustainable, providing a more robust buffer against future economic shocks. The government must, therefore, be circumspect about the levels of debt it is willing to take on. It is crucial to maintain a manageable debt-to-GDP ratio, not just based on current revenues but also considering potential downturns in the oil market. The Venezuelan experience demonstrates how quickly a country can move from apparent prosperity to economic despair when over-reliance on a single commodity, combined with high levels of debt, leads to a financial crisis. The PPPC government, while enjoying the benefits of a growing economy driven by oil revenues, must not lose sight of the potential dangers of rising per capita debt.  High levels of debt can become a significant burden, particularly if the country’s main revenue source falters. (The views expressed in this article are those of the author and do not necessarily reflect the opinions of this newspaper.) Related Similar Articles

PPP must be condemned for using Emancipation Day to divide and dishonour Afro-Guyanese Jul 31, 2024 Letters Dear Editor, The PNCR condemns the actions of the PPP government in using this year’s Emancipation Day observance to seek to divide and dishonor the Afro-Guyanese community and to undermine its efforts at self-determination, self-expression, and self-organization. The government’s intention to sponsor a free event on Emancipation Day on Malteenoes Sports Club ground to clash and compete with the traditional ACDA event directly across in the National Park reeks of the PPP’s disregard for Afro-Guyanese in the land of their birth. For the last 31 years, the African Cultural & Development Association (ACDA) has organised the Emancipation Day event. It is now both national in its significance and nationally-recognised as such. But the event has now become the latest victim of the PPP’s obsession to dominate, dictate, and control every space in Guyana. Instead of using the country’s oil blessings to promote the dignity and prosperity of all Guyanese regardless of political affiliation, social status, and race and ethnicity, the PPP has opted instead to engage in the politics of division, deprivation, and dependency. But the PPP is foolhardy to believe there is political gain in undermining or bypassing genuine Afro-Guyanese institutions and forms of self-expression. It is likewise foolhardy to believe there is political gain in forcing several Afro- Guyanese into acts of servitude and self-humiliation so that they can receive what is rightfully theirs as citizens. The PNCR is confident that, as history has shown, the pride and dignity of people will eventually win out. We call on all decent-minded Guyanese to continue to condemn and reject these acts by the PPP that destabilise national unity, counteract ethnic harmony and weaken the social contract between citizens and their government. As the next government, we will end these vile practices. It is time for a new Guyana where all citizens and groups are respected regardless of their race/ethnicity, social standing, and political affiliation. Regards, People’s National Congress Reform Related Similar Articles

Sir Clive Lloyd is a gentle giant Jul 31, 2024 Letters, Sports Dear Editor, Sir Clive Lloyd was recently conferred with the Order of the Caribbean Community (OCC), the region’s highest honour at the 47th regular meeting of the conference of CARICOM Heads of Government in Grenada. This is a monumental and historic acknowledgement to be bestowed on a distinguished Guyanese son of the soil; but more importantly a global symbol who inspired millions across the world. I had the distinct privilege and honour to meet and work with Sir Clive when he served as the Chairman of the Interim Management Committee when cricket was in turmoil following the undemocratic rule of the previous administration of the GCB. I sat as a representative of the Essequibo Cricket Board (ECB) then, and participated in a number of meetings that sought to end the turmoil. In all of those unforgettable events which sometimes were highly and emotionally driven, Sir Clive remained composed, calm and unshakable in an environment that included Ministers, PS, senior government officials and the then faction of the GCB (Bissoondial Singh, Claude Raphael, Ronald Williams) etc. I studied Sir Clive at every meeting with undivided attention and what struck me the most was his soft- spoken voice; every word penetrating and comforting as though he was delivering advice to Joel Garner, Colin Croft or Sir Andy Roberts during a tensely driven match. Such skill, charisma, temperament and charm are unique and it is an embodiment of the strength and success of what Sir Clive Lloyd has achieved. His record is unmatchable and remains like the glittering and enduring Kaieteur Falls for the world to embrace and emulate. Our country and people should be proud of this significant achievement and as we celebrate in unison, perhaps it is time to once again make the call for the national stadium to be renamed after him. Sir Clive has paid his dues, weathered the storm, delivered when it mattered, fought for the restoration of democracy at the GCB and continue to provide leadership, mentorship and a sense of hope to those who have been touched in some way by his talent and his unwavering commitment to bring about transformation, unity and prosperity among our people. While our own, Dave Martins continues to question in melody “where are our heroes Caribbean, show them to me”, Sir Clive is standing tall like a true hero, patriot and nationalist. Sir Clive Lloyd will forever be etched into the bosom of our hearts as a gentle giant. Yours faithfully, Elroy Stephney Related Similar Articles

Another aspect of diaspora engagement was the New York job fair  Jul 31, 2024 Letters Dear Editor, “The event was a success and is a clear manifestation of the GoG’s (Government of Guyana) interest and commitment to ensuring that the Diaspora is integrally involved is the development of Guyana and benefitting from the nation’s prosperity.” This statement by Hon Michael Brotherson, Guyana’s Consul General to New York encapsulated the essence of the objectives of the Job Fair held at LaGuardia Marriott Hotel in Queens, New York on Saturday, July 27, 2024. The stated objectives of the jointly-sponsored Job Fair (GoG and Private Sector) were to (i) learn more about the job opportunities in Guyana, (ii) to allow Guyanese to network with business leaders; (iii) to offer Guyanese the opportunity to learn more about small and medium sized businesses, (iv) to provide information on remigration; and (v) to learn how Guyanese could contribute to the country’s rapid development. The Guyana Consulate says that 300 Guyanese registered as participants at the Job Fair, while 17 businesses, including Exxon Mobil, were exhibitors. In attendance were the Mr. Robert Persaud (Foreign Secretary); Mr. Annand Persaud (Minister in the Ministry of Local Government and Regional Development); Hon Sam Hinds (Guyana’s Ambassador to Washington); Dr. Peter Ramsaroop (CEO Go-Invest); Rosalind Rasul (Head of Diaspora Unit at Ministry of Foreign Affairs); Mr. Fazal Yussuf (Diaspora and Investment Officer at the New York Consulate); Mr. Shyam Nokta (former Chair of the Local Cone t Panel and currently Managing Director of Environmental Management Consultants); the Hon Michael Brotherson (Consul General in New York); and his entire consulate staff. Representing the private sector was Mr. Komal Singh, chair of the Private Sector Commission. He was there with his family. Mr. Singh said that the private sector was pleased to be a part of this initiative that is the brainchild of President Dr. Irfaan Ali. Ms. Rasul presented a video that depicted some of Guyana’s major infrastructure development projects for the benefits of participants. She also discussed duty free concessions for Guyanese re-migrants. Dr. Peter Ramsaroop had a busy day discussing the investment possibilities and related tax incentives. Wood Direct’s Managing Director, Mr. Rafeek Khan, who also serves as Chair of the Guyana Manufacturing and Services Association (GMSA), was also busy explaining his company’s role in the construction and housing sector. Critical labor shortages in the housing, construction, transport, oil, and other sectors would hinder the rate of the country’s development. The GoG has therefore embarked upon an aggressive campaign to recruit and train particularly skilled and semi-skilled labor. Pending a revision of the country’s immigration law to accommodate migrant labor within the economy, the GoG has accelerated the skills training programs (BIT and TVET) to expand local capacity. The private sector also conducts skills training programs but quantitative data on scope and level are not available. For the period (2020-2025) over 11,000 Guyanese were trained by the Board of Industrial Training (BIT) in various skills and semi-skills areas and an estimated 80% of them are gainfully employed. At the TVET (Technical and Vocational Education Training) another 18,000 Guyanese have been trained during the same period and an estimated 75% of them (BIT and TVET) are in gainful employment. But this level of training would only cover a small part of the labor shortage. Some businesses have already imported skilled labor, while others might soon move in that direction if the labor could not be sourced in Guyana. For example, GAICO Construction and General Services, Inc says that they are thinking of sourcing migrant labor to fill 139 existing vacancies in various categories within their establishment. While the GoG has not yet revised the country’s immigration law to accommodate migrant labor within the economy, the country’s rapid economic development, including technological changes, has caused them (GoG) to accelerate their skills training programs to expand local capacity. Notwithstanding, a recent study suggests that Guyana may need to import about 89,000 workers by 2030 to fill existing vacancies in various sectors. By 2028 Exxon Mobil would need an additional 5,000 workers. It is too early to say how many of the 300 registrants at the New York Job Fair would follow through with their interest (whether via jobs, investment, etc) in contributing to Guyana’s development. The Job Far also helped to update Guyanese with developments taking place in Guyana. Sincerely, Dr. Tara Singh Related Similar Articles

The sloth of Justice in Guyana Jul 31, 2024 Letters Dear Editor, The sloth of justice in Guyana continues to manifest itself. Four years to get the elections case to this stage is ridiculous, but it still falls short of the time it is taking to have justice being delivered in the Crum-Ewing case. The AG was a fellow student with the deceased and his cry for justice when in opposition has grown silent during his four years in office. When will our QC alumni be allowed to rest in peace? It was the event that shifted the hold of power. Even the APNU+AFC have not done their job properly in this matter. The Murder She Wrote concert took place at the beginning of their term in office, but Justice in the Crum-Ewing case was never delivered. As for the AFC’s Presidential candidate, he is now erasing all doubts by speaking up for those involved in the attempted theft of the last elections. His decision to place the earning of money before the democratic rights of the Guyanese people makes it very clear where he would stand when it comes to Exxon and his law firm. Everyone who watched what took place during the last elections knows very well what happened. From the infamous signature to the bed sheet, no one has forgotten how wicked the elections process became. The Presidential candidate for the government is also questionable, but he has silenced many by spreading the wealth gained from oil. Even if the Canadians have decided to turn a blind eye to the 5 charges that they conveniently ignored and dropped over the last 4 years, the opposition has become complicit with their silence. The party goes on with the Ganja Defence Force and the Soca music plays loudly at SOCU. Yet the blood of a fallen alumni from our prestigious Queen’s College continues to cry out for justice from the ground. The sloth of justice in Guyana has been enabled by the ill-gotten riches of fools and the attainment of wealth at the expense of all. It has been forecasted that 22 major storms will take place this year. Beryl was just the first. Party on and enjoy the bounty if you must. Maybe the bounty that comes with a just existence will eventually be begotten. Sincerely, Mr. Jamil Changlee Related Similar Articles

Incapable of stemming the opposing tide, the regime opted to manipulate the election results and make a mockery of the peoples will. By La Nacion*...