In the "normal" case that the real exchange rate tends to appreciate following an increase of oil earnings, government policymakers can "engineer" that appreciation in two ways. In the first case, the central bank maintains a floating exchange rate....
One of the possible harms of an oil export boom is that the rise in oil earnings leads to increased public and private spending, which in turn leads to a sharp appreciation of the real exchange rate, and then...
Oil earnings for an emerging economy such as Guyana should be turned into public investments rather than into increased private consumption. Most poor countries are severely constrained in their development by the under-provision of public goods.
Economic development, though undoubtedly...
Successive Guyanese governments will have to consider the concept of a separate oil fund. A separate fund could entail providing for a fixed sum to be spent in areas additional to the government’s main spending programmes. However, it may...
Full national considerations are also relevant to a depletion policy of a country’s petroleum resources. Security of oil supplies must be a consideration in Guyana. Possession of crude oil reserves can obviously make a contribution to the solution of...
The rate at which Guyana’s Offshore Basin oil reserves will be depleted will clearly be influenced by the licencing arrangements. The basic decisions regarding the frequency and size of licence rounds, the location of blocks on offer, and the...
The establishment of state oil companies is very common in oil-producing countries. Most petroleum producing countries have incorporated state participation in their licensing regulations and/or legislation. The establishment of a national oil company can be justified on several grounds.
...
The pressure to source supplies from Guyana can lead to increased exploration, development and operating costs. Guyana’s offshore oil activity levels will be very sensitive to movements in oil prices and costs. At any one time in a province...
The introduction of a contingent system of taxation is not the only possible response to the existence of exploration risk. The state could reduce the perceived risks by financing a programme of geological research. The fruits of this research...
To maximize the potential national benefits appropriate licensing, taxation, depletion and pricing policies are required. Given the high degree of geological uncertainty in the early years, some use of the discretionary licensing system to award acreage was appropriate, but...