Guyana already gripped by Dutch Disease – Former Finance Minister
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Kaieteur News – One of the latest reports of the Inter-American Development Bank (IDB) has projected that for 2022, Guyana’s oil and gas resources will account for almost 60 percent of Gross Domestic Product (GDP), clearly outstripping the contributions of the other traditional sectors such as rice, sugar, bauxite, timber and gold.
Taking this level of domination into account, along with the heightened cost of living pressures, former Finance Minister, Winston Jordan said the Dutch disease phenomenon is already in Guyana.
For those who may not be aware, the Dutch disease is a concept that describes an economic phenomenon where the rapid development of one sector of the economy (particularly natural resources like oil) leads to a decline in growth of other sectors.
Former Finance Minister, Winston Jordan
In a recent interview with this newspaper, Jordan intimated that the government’s incessant “diversification talk” does not change the fact that the contributions of other sectors are declining due to what he believes is a clear case of economic mismanagement. Jordan reasoned that there is only so much blame that the government can throw at the feet of the COVID-19 pandemic and the Russia-Ukraine war. “Yes, those things do contribute to the economic strain but they cannot be blamed entirely,” Jordan stated.
Expounding further, the former Finance Minister said, “Government is spending the oil money like wildfire and rushing the development of the oil without any care for environmental consequences that abound. Who will be left on the hook when we start experiencing acid rain when the 10 oil ships are out there releasing toxic gases into the atmosphere? It will not be ExxonMobil; they are just on the hook for eligible oil spill costs.”
Added to those environmental concerns, Jordan said the country is heavily dependent on oil; meanwhile, the traditional sectors are losing their competitive edge. Jordan said, “When you look at the non-oil performance and outlook, it is a sorry picture for Guyana. The Dutch Disease is already here, oil is already dominating the economy. The real sector which includes rice and sugar which are in distress, along with bauxite, and gold, nothing much is happening. Their contribution is waning and it is the opposite of what the government is saying…”
The economist added, “You have never seen this level of poverty before and that is a symptom of the Dutch Disease…”
In a previous article published by this newspaper, Jordan had also cautioned citizens to not fall prey to “screaming headlines” about Guyana being the fastest growing economy on in the world. He stressed this is nothing but a mere mirage to distract from the real economic danger at hand. The economist said the real truth can be found in an examination of the dismal performance of the non-oil economy.
FIRST QUARTER REPORT
According to Bank of Guyana’s 2022 first quarter report, the rice and sugar industries experienced declines in production by 53.1 and 47.7 percent, respectively.
The institution explained that the substantial decline in the production of rice can be attributed to the effects of the flooding in 2021, which prevented farmers from sowing all available lands for the first crop of 2022 along with higher input costs.
Kaieteur News also understands that sugar production decreased as a result of the halt on grinding at the Uitvlugt Sugar Estate caused by mechanical issues which impacted production. This estate was responsible for 25 percent of output.
