Dear Editor,
It is an uncomfortable truth that the ‘haves’ view the ‘have nots’ with a socially conditioned disdain – not a Guyanese thing but a human reality. The ‘have nots’ are assumed to not have because of not being capable of self-restraint and generally being not deserving – without considering accident of birth as a factor other than to justify the ‘not deserving’ limb.
The first Guyanese ‘have’ to propose a cash grant to all Guyanese households, was renowned economist Professor Clive Thomas in 2018. The idea was dismissed outright by almost every other Guyanese ‘have’, including the collective voice of the then Government. Commentators said that people would waste the money, political parties would manipulate cash grants to win votes – and that the idea was wholly unaffordable anyway. The good professor was thinking ahead of time, for the amount then earned by Guyana from oil lifts was still only about USD120M which has since soared to around USD1.24Bn today and growing, with projections for accelerated growth as more FPSOs are put into production.
In fact, the coming online of Yellowtail in 2025 will make Guyana the world’s largest per capita producer: OilNow, 16 August 2022. Guyana has a National Resources Fund. The purpose of a National Resources Fund (NRF), the name ours is called under the generic term, Sovereign Wealth Fund, is to preserve the wealth derived from current exploitation of an exhaustible national resource, by investing in stocks and assets usually abroad, so that by this diversification future generations will yet benefit long after the resource is exhausted. Norway, the country most cited as providing the copybook on how to run a NRF, only started theirs some 26 years after commencing oil production, by which time the standard of living of the average Norwegian was uplifted very significantly. We were well advised to start ours much sooner – but who does the fund benefit currently?
Our NRF funds are held in the US Federal Reserve. We would have it no other way, both because we don’t trust ourselves and also because a small country can be invaded under some pretext for the amount of US dollars Guyana will inevitably accumulate in a few short years. Whereas infrastructural projects are under way in Guyana, the direct current beneficiary of the fund is obviously the US Federal Reserve which holds the money in US dollars – so how could the current generation of ‘downpressed’ Guyanese also benefit? According to the World Population Review 2022, Guyana’s population, as on 7 November 2022, was estimated to be 809,041 with 533,450 persons over 18 years of age. If each Guyanese citizen over 18 years old were to receive a grant of GYD500,000, that would cost USD1,288,526,570 or just under USD1.3Bn which would surely be affordable come the end of the first Quarter of 2023 – the likely time it would take anyway to put the administrative machinery in place to deliver nationwide.
The first payout could be a disbursement paid to cover the first 2 years, with only those attaining 18 years of age in Year 2 being eligible to receive payment in Year 2. With oil production increasing rapidly, ExxonMobil alone expecting to have FPSOs producing 1.2M bpd by 2027, up from the current 365,000 bpd produced today, the grant could be distributed annually from Year 3. A system based on a formula programmed into the NRF machinery will not be subject to political whims, for the people will know in advance how much to expect in what year going forward irrespective of the political leadership at any given time. Guyana’s NRF will only continue to grow bigger, despite the demands of a rapidly growing population due to an abatement of good reasons to emigrate, returning nationals and an influx of foreign workers, as only Guyanese will be eligible for cash grants.
Moreover, the NRF will be boosted massively by the combined impact of our eventual upgrade from 12.5% to a 50:50 share of profit oil, after cost recovery is satisfied in respect of the ExxonMobil Agreement, and a successful outcome to the upcoming auction of 14 oil blocks. The blocks will be subject to a revised PSA that ups the
royalty to 10% and also introduces the payment of tax by oil companies. The affluent ‘haves’ would leave their grant money untouched in bank accounts or perhaps spend it on a holiday. The ‘have nots’ whom it is claimed would waste the money will not do so in notable numbers. Whilst a tiny minority will indeed spend it all on drinks, prostitution and drugs within a month, the overwhelming majority who are currently under siege financially would be much more prudent. They will express their relief by splurging on whatever is their chosen personal indulgence, with say $50,000 of it, then do something sensible with the remainder to mark their first cash grant drawdown.
It is the Guyanese way to recount and cite proudly in conversations what we did with a windfall of any significance. Citizens have businesses to re-energize, homes to renovate, stubborn debts to pay off. Young adults will have tertiary tuition and exam fees, or the deposit on that first car to pay for. Half a million dollars will allow many to approach the CH&PA with serious intent. Others will simply save the money as a useful backup to be accessed when inevitably needed. The exchange rate will however need to be very carefully managed as the economy thus reinvigorated will bring cash volume challenges in the short term. However one looks at it, a universal cash grant scheme will be well received by all Guyanese – and with profound gratitude by the majority. It would make us all proud to be Guyanese. It would add tangible and emotional cement to One Guyana. Most of all, for practical purposes, it would be affordable today and more than affordable going forwards.
Sincerely,
Ronald Bostwick