Massive cash injection from oil production is expected to have a multiplier effect on the Guyana economy that will fuel a construction boom and trigger growth in a number of other sectors. This is the view of Guyana’s Business Minister, Dominic Gaskin, speaking at a recent oil & gas forum in the country’s capital, Georgetown.
“Government will experience a sharp increase in its revenues from royalties, from production sharing payments and from withholding taxes from foreign companies supplying the industry,” he said, adding that this coupled with revenue generated by local suppliers of the industry will add to the cash injection to the economy.
“So this is the money that will transform Guyana’s economy,” Mr. Gaskin pointed out, while noting that transformation is different from growth. “Government has already established that infrastructural development in the areas of transportation, energy and communication will be prioritized in order to attract more investments in key economic sectors.”
He said this would serve to better connect Guyana’s vast hinterland to the country’s coast.
“So we can conclude that the construction sector is likely to be among the early sectors impacted by government’s spending of oil revenues,” he stated.
The positive results outlined by Mr. Gaskin are however predicated on having in place a robust system to manage the expected windfall from oil production. Speaking in an op-ed published on March 13, US Ambassador to Guyana, Perry Holloway said the establishment of a revenue and investment framework that effectively manages the expected windfall is of vital importance if the South American country is to be truly transformed.
“I want to emphasize that, as Guyana considers its future, it will not be enough simply to have a “rainy day fund” or even an investment fund, but to institute a revenue and investment framework that protects and effectively leverages wealth to transform the nation,” he said.
The Ambassador urged that conversations continue in the South American country that would ensure the implementation of a strong comprehensive Sovereign Wealth Fund bill that is “transparent, independent, inviolable, and non-partisan.”