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Wednesday, March 3, 2021

Back from the brink – Guyana looks ahead to oil-rich future

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OilNow is an online-based Information and Resource Centre which serves to complement the work of all stakeholders in the oil and gas sector in Guyana.

Guyanese breathed a sigh of relief on Sunday when it became apparent that a five-month long ordeal that saw no end to the March 2 elections was finally ending. A meeting of the Guyana Elections Commission (GECOM) started just after 10:00 am with most of the country expecting, in keeping with what had become the norm, that not much progress will be made in ending the impasse.

However, after more than 150 days with no declaration of the elections results by GECOM, less than seven hours after that meeting got underway, a new President was sworn in after the declaration was finally made.

This comes after increasing concern from Guyanese, its CARICOM neighbours and international partners, that the new oil producing South American country was descending into a dictatorship. This was the view, after the incumbent coalition administration made repeated attempts to block a declaration of the elections results and comments from some of its leaders often pointed to a refusal to accept one, if it showed a loss for the party.

While the 5-month ordeal has opened wounds and increased division between the two main ethnic groups which are split close to 50/50 along party lines, the transition on Sunday was peaceful, signaling the majority of Guyanese are ready to move on as the country prepares for a windfall from its hydrocarbon resources.

US oil major ExxonMobil has found more than 8 billion barrels of oil equivalent resources off the country’s coast in a series of world class discoveries – totaling 16 so far – since 2015. Oil production began last December at the giant Liza field and several other development phases are being planned, even as the search for more hydrocarbons continues in earnest.

Guyana’s economic take-off tied to development of multi-billion-barrel oil resources

The projected revenue and economic impact of the oil resources make Guyana the only country in the hemisphere expected to record growth this year. The World Bank in a report published in April said the Latin American and Caribbean region would register a sharp fall of 4.6% but noted that Guyana is expected to grow by 51.7% despite the onset of severe economic upheaval due to the impact of the COVID-19 pandemic.

The International Monetary Fund (IMF) has revised Guyana’s Real Gross Domestic Product (GDP) for 2020 to 52.8%, down from a high of 86%, but still way ahead of countries in the region and around the world as global growth is now projected at -3.0% in 2020.

Guyana’s success as an oil producer has always been dependent, not only on its ability to effectively manage oil revenue, but the country’s commitment to remain true to democratic values. The elections fiasco was a formidable test to this principle, but the country seems to have pulled through.

How well Guyana does going forward will now be largely dependent on the ability of the new government to unite the country while strengthening and building key institutions that can foster transparency and accountability.

“Guyana…has gotten lots of advice, they’ve thought about a sovereign wealth fund, they’ve thought about a public accountability board, they’ve thought about a petroleum law — but they haven’t implemented it yet. They’ve got a framework on paper of a system that would provide accountability, but they haven’t implemented it yet,” David L. Goldwyn, President of Goldwyn Global Strategies and former U.S. State Department’s special envoy, pointed out last year.

The people of Guyana must now ensure their new government moves to implement these initiatives, as the country looks ahead and charts a course that leads to prosperity.

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