In anticipation of Guyana’s projected oil revenue, the nation’s finance minister, Winston Jordan says that a portion of the money should go to the improvement of other productive sectors.
Speaking to OilNOW, at his Ministry’s office on Main Street, Georgetown, Mr. Jordan explained that such a course of action is the best defense against the Dutch Disease.
“The Dutch Disease is not only real, but it could be on a major scale, and judging from what happened in other countries, we must be very concerned. The decent thing about Guyana is that Guyana found oil late. So, we should concentrate on the agrarian sector and a small amount on the industrial sector. Even though they aren’t well developed, we have a fair amount of experience and a fair amount of investments in [these sectors,]” said Jordan.
The Dutch Disease, in the context of the oil industry, is often characterized by employment and capital flight from other sectors into the oil sector, in addition to an appreciation of the nation’s currency and the loss of competitiveness in other industries due to the now higher costs to export. However, Mr. Jordan notes that while Guyana is no stranger to commodity booms and busts, they will pale in comparison to one within the oil industry, if its effects are not mitigated.
“Very often this takes place in enclave industries, industries that, even though they operate on your territory they are basically geared for the export sector. That is the case with bauxite, we don’t do anything with bauxite except dig it up, put it in the bowels of ships, and ship it. Same thing with gold… and even to an extent sugar… But this is major and bauxite [and other extractive industries are] going to be dwarfed by petroleum…” he said.
Stressing the need to use oil revenue to invest in other sectors such as agriculture, to avert the negative impacts of the Dutch Disease, the finance minister said, “It’s not like we’re going to have to diversify into agriculture when the oil monies come in. What we need to do is to make agriculture great again, to borrow a Trumpian phrase. Because agriculture was great one time in this country. Agriculture built this country…”
Guyana mainly exports raw goods and materials. This means that the nation only acquires a fraction of what it could fully earn, in comparison to exporting finished or refined products. As such, Minister Jordan feels that the key to unlocking the full potential of Guyana’s agriculture industry is for Guyanese to mass-produce agricultural products that are of export quality and in export quantities and to also focus heavily on value-added.