Expert warns against ‘spending bonanza’ when oil comes on stream
DPI, GUYANA, Saturday, March 24, 2018
Renowned expert and Professor of Economics, Oxford University, Sir Paul Collier during a recent media engagement restated the need for oil and gas revenues to be predominantly utilised for investment, rather than consumption purposes.
Collier, who visited Guyana for a high-level ministerial caucus, where he engaged members of the Cabinet on managing the impact of natural resources, told the local media that the country needs innovative forms of energy since everyone is not, and cannot be, on the national grid.
He cited that new technologies can enable Government to provide citizens with efficient off-grid energy for domestic and business consumption. This, the expert said, is one of the major benefits of a growing oil and gas sector.
“That basically means electricity for all, connectivity for all,” Collier posited.
Monies accrued from the oil and gas industry can be invested for this and other purposes, he noted, “Consumption is great, but if you just use it for consumption this generation will live well and your children will live badly.”
Diversification and investment in new activities were underscored as measures to ensure continuous development.
The need for prudent macroeconomic management during the oil boom was cited since according to Collier, lack of proper management can plunge the country into poverty.
“You want proper investment projects with good returns and transform people’s lives like bringing good electricity, transport connectivity, giving people an education,” he urged. He cautioned that expenditure be done gradually and that Government avoids a “sudden bonanza” in spending as this leads to an appreciation in the currency.
Norway is a good example of how prudent management of the revenues from industry can augur well for a nation for decades, Collier posited.
Asked how Guyana can balance its impending oil and gas industry while pursuing a green state, the Professor advised that projects be designed sensibly so that they do not harm the environment; an achievable task.
Collier described Guyana’s oil discovery as one of the most historical opportunities for centuries and therefore it is imperative that Government “gets it right.”
Additionally, he pointed to the need for discourse among all stakeholders in an atmosphere of tolerance and respect for all views in this process.
Statesman and Adviser, Sir Shridath Ramphal, who was in attendance lauded the ministerial caucus as the kind of conversations that are necessary as the country prepares the industry.
Collier, during the ministerial caucus, applauded the Government which he said is starting on the “right footing” specifically as it relates to the establishment of the Sovereign Wealth Fund and plans for investment in training opportunities.
By: Stacy Carmichael