The resource curse, sometimes referred to as the paradox of plenty, afflicts a number of resource-rich countries around the world, and with the coming of oil, Guyana is becoming increasingly aware of the dangers associated with this scourge.
In addition to draft legislation currently being developed that would see the South American country establishing a Sovereign Wealth Fund, a number of workshops and presentations on the effective management of petroleum revenue has been held since the first oil discovery at the giant Liza field was made in 2015.
One such presentation recently took place on May 21 at the Guyana Marriott Hotel, organized by the World Bank and the Guyana government, through the Ministry of Finance. Speaking on this occasion, Norwegian Economist and expert in the field of natural resources management, Vidar Ovesen, outlined pitfalls associated with the resource curse. Poor governance, bad investments, lack of fiscal discipline and neglect of non-petroleum sectors were cited as key factors in creating conditions for the resource curse.
Mr. Ovesen said corruption, waste, mismanagement and lack of transparency in governance should be avoided at all cost. The tendency to embark on “prestigious projects rather than poverty reduction and economic and social development”, spending too much too fast and “rent seeking rather than focusing on sectors that are important for long-term development and employment” were all flagged as potentially disastrous policies.
Designing a strong legal and institutional framework with emphasis on good governance and transparency is critical, he said, to Guyana being successful as an oil producing nation.
The Economist has provided technical assistance and capacity development to a range of countries in the oil and gas revenue management field. He has been engaged by NORAD’s Oil for Development (OfD) Secretariat to work for Finance Ministries in various countries, including as residential adviser to the Ministry of Planning and Finance in Myanmar in 2015. He also provided technical assistance and training to the Finance Ministries in Ghana, Uganda and Kenya under the OfD Programme and was engaged by the World Bank and IMF on projects related to stabilization funds in Paraguay and management of revenues from deep sea mining in the Pacific Islands as well as a number of Norwegian Embassies.