Guyana trying to avoid ‘Dutch disease’
– focused on ensuring oil revenues meet development needs
– Dr Ashni Singh
Guyana is doing everything in its power to avoid the dangers of Dutch disease, which has befallen many oil-rich countries around the world.
Senior Minister with responsibility for Finance in the Office of the President, Dr. Ashni Singh made this statement today, during a virtual roundtable discussion on Guyana’s finance and investment with LatinFinance. LatinFinance is a source of financial markets intelligence of the Latin America and the Caribbean.
Dr. Singh said Guyana’s petroleum sector would boost its gross domestic product (GDP). However, the Government would be managing the economic inflow to ensure it addresses the country’s immediate developmental needs, as well as plans for sustainability. The Minister said the Government is also trying to avoid a situation where revenues from the petroleum sector undermine the competitiveness of the non-oil economy.
“We want to make sure that we avoid the pitfalls that we’ve seen other countries that have gone this route before in culture, and here I mean excessive dependence on or excessive exposure to a single sector. We recognise our oil and gas will drive a dramatic expansion, but we recognise too, that we need to ensure that we put in place all of the macro structures that are necessary to avoid for example, Dutch disease,” Dr. Singh told the webinar.
Dr Singh said the Government has placed a lot of ‘policy emphasis” on ensuring that the non-oil economy continues to be competitive and contribute to the country’s overall GDP growth.
“We’re anticipating a rapid expansion on the services side, logistic, transport and the on-construction side-construction of infrastructure, construction of office buildings. On the services side, rapid expansion in services including financial services, all of which will contribute to rapid expansion in real output,” Dr Singh relayed.
With a Sovereign Wealth Fund in place, the Finance Minister said the revenues there will be managed in accordance with the highest international standards.
“So, what does that mean? We’ve subscribed to all of the major international standards for managing resource revenue responsibility and sustainability. This means ensuring that we address issues like the inter-generational issues and also the Dutch disease issues because what you don’t want is a rapid inflow.”
Dr Singh said the Government wants to ensure the country and economy are prepared.” Investopedia states that the “Dutch disease is an economic term for the negative consequences that can arise from a spike in the value of a nation’s currency. It is primarily associated with the new discovery or exploitation of a valuable natural resource and the unexpected repercussions that such a discovery can have on the overall economy of a nation.”