Introduction
Column 40 noted that in practice, any Sovereign Wealth Fund for Guyana has to take a whole host of factors into account, including the country’s recurring deficits which are financed by loans; the deficit in its infrastructure; future revenue gains and losses; commodity prices including that of oil; and citizens’ rising expectations. In this Column attention moves away from the 2016 Petroleum Agreement to something into the future, something that considers how Guyana will use the oil revenues which will start flowing in 2020.
There are of course so many variables about the petroleum industry that indulging in projections is something of a fool’s game. One of the biggest uncertainties of course is the price of oil into the short, medium and long terms, which cannot be separated from the even bigger question of fossil fuel versus renewables; the cost of production by the monopoly producer; the effect of transfer pricing if any; the economic policies of the government of the day which will themselves be driven by popular expectations and political imperatives; the attitude of future governments into the next several decades to the crippling stability clause which Minister Raphael Trotman has embedded into the 2016 Agreement and the consequences of any attempt by a new Government to force a better deal; the effect of the Dutch Disease which is already rearing its ugly head with the loss of hundreds of jobs in the lower East Bank, Demerara; and of course a less likely unfavourable outcome of the border controversy with Venezuela.