Guyana aims to avoid oil curse by spending on health and education
Qatar Tribune
The president of Guyana, the worldâs fastest-growing economy, is inviting investors to back his ambitious vision to transform the small South American coun...
The president of Guyana, the worldâs fastest-growing economy, is inviting investors to back his ambitious vision to transform the small South American country into a regional health, education and transport hub with the help of burgeoning oil wealth. âWeâre investing tremendously in healthcare and we are investing heavily in educationâ, President Irfaan Ali, 42, told the Financial Times in an interview while visiting London last week to seek investment. âNot only are we investing in healthcare and education to fulfill the needs of Guyanese but also in healthcare and education as important foreign currency earners of the futureâso that Guyana can become a health and education hub for South America, Caribbean and the huge diaspora that resides in North America.â A former British colony with a population of 787,000, Guyanaâs fortunes have changed out of all recognition since ExxonMobil discovered large offshore oil deposits in 2015. Crude oil production began in 2019 and is rising rapidly. Exxon and its partners, Hess and Chinaâs Cnooc, plan to reach output of 340,000 barrels per day this year. Ali said Guyanaâs oil production could exceed 1mn b/d in three years, increasing revenue for the government of almost $4bn this year to $10bn a year from 2025. Until recently one of the poorest countries in the Americas, Guyana is hoping to avoid the âoil curseâ that has befallen so many nations by spending its newfound wealth on building a sustainable economy for the long term.Transport infrastructure is a crucial element. South Americaâs only English-speaking country, Guyana has historically been cut off from its neighbours by rivers and jungle, but the government is planning to build highways and bridges connecting it to French Guiana and Suriname to the east and Brazil to the south. These road links, plus a planned deep water port on its Caribbean coast, could open up a transport corridor from northern Brazil to Atlantic markets. âWe have intense discussions going on with Abu Dhabi Portsâabout the development of a major deepwater harbour in Guyana,â Ali said. âThat deepwater harbour will support northern Brazil and give them access to the Atlantic.â Ali estimated the likely cost of the port as âon the upside of $2bnâ. He said Abu Dhabi Ports was offering to finance the project but the Guyanese government might co-invest. For a highway going south to Brazil, Ali said a tender for construction of the first section had already been awarded and work would begin soon. As its oil industry develops, Guyana is considering creating a national oil company. But Ali stressed that if this were to happen, it would âoperate like a businessâ and would focus on new development and ânever ever be part of taking over existing production from foreign operators. That is out of the question,â he said. The rapid rise in oil production means Guyanaâs economy is forecast to grow 47 per cent this year, the fastest in the world, according to the International Monetary Fund. This comes on top of growth of 20 percent last year and 43 per cent the year before. A sovereign wealth fund has been created to safeguard the oil revenues for future generations.David Jessop, editor of Caribbean Insight and an expert on Guyana, said the biggest constraint to Aliâs ambitions was likely to be a lack of people. âWhen you look at the size of Guyanaâs population and where it is located, you realise that the main constraint is human resources,â he said. âThe countryâs potential is there but to deliver it is a real serious challenge.â Ali is keen to emphasise other assets which existed before oil was discovered, such as Guyanaâs 18.5mn hectares of rainforest, which could support eco-tourism and a biodiversity centre as well as generating revenue from conservation. âMany people donât know that Guyanaâs forests store 19.5 gigatonnes of carbon,â he said. âThat can have an annualised income of close to $200mn through carbon credits and carbon markets.â Ali said the oil boom had brought visits from a wide array of international financial institutions, sovereign wealth funds and investment funds. Other actors with less benevolent intentions have also taken an interest. The hurdles to the achievement of Aliâs vision are formidable. Many developing countries have squandered oil wealth in corruption, wasteful construction projects and shortlived consumption booms. There may also be political issues. Guyanaâs democracy is fragile and the country has long been divided along ethnic lines between the majority Afro-Guyanese and the minority Indo-Guyanese. Ali belongs to the latter group and his election victory in 2020 led to a tense stand-off lasting months before incumbent David Granger accepted the result. When asked about the challenges ahead, the Guyanese president tried to strike a cautionary note. âAs a people, we have to remain humble,â Ali said. âWe are not in the business of building fanciful infrastructure. We have to build infrastructure that the country needsâand not investment in infrastructure that looks good.â(Financial Times)