In an effort to ensure it did not suffer the fate of many resource rich countries around the world, Trinidad and Tobago carefully outlined the errors that should be avoided in the management of petroleum revenue; but then proceeded to commit every one.
This was the view shared by Trinidadian Economist, Dr. Roger Hosein, who recently delivered a candid lecture to a large audience in Guyana, focusing in part; on the perils of managing oil and gas wealth.
He said like Guyana, Trinidad and Tobago had an opportunity to properly prepare for the management of petroleum revenue which should have ensured that known mistakes were avoided at all cost. “Trinidad and Tobago also had a chance to prevent these things from happening. In my view we made a list of some of the errors not to commit as an oil producing economy…and then we proceeded to make every error,” he said.
Despite the efforts of those tasked with managing the economy, Dr. Hosein said somehow the real effective exchange rate was allowed to appreciate, and the State began intervening in the labour market; thereby challenging the private sector for workers. “The State embarked upon a programme where basically on each day they spent all the oil resources extracted on that day. All of these things are the opposite of what good practice theory would tell you,” he pointed out.
In words of warning, the Economist said the Trinidad and Tobago institutional position, from a governance perspective, was much stronger in 1999 when the energy boom started, than Guyana is today, before first oil. “But even so, I believe you all when you say that you will prevent it. I will be watching and listening to see,” he told the persons gathered.
In emphasizing his point that resource wealth requires stringent management and a robust economic framework, the Trinidadian Economist did not shy away from highlighting the mistakes made by his country. He made it clear that squandering of revenue and failure to adopt and implement sound fiscal policies would ensure Guyana suffers the same fate as its Caribbean neighbor.