Dear Editor,
Guyana’s oil economy is now mirroring its lopsided oil contract. The world’s highest growing economy in 2022 is not spreading the fruits of growth evenly across Agriculture, Manufacturing, and Services.
Indeed, the rich versus poor is mirrored by oil and non-oil economy – the high growth oil sector registering 90% growth in the value-added income from G$1566 Billion in 2021 to G$2980 Billion in 2022 (see Bank of Guyana Annual Report 2022).
The World Bank was quick to adjust Guyana’s classification from a poor to a rich country, without considering that it takes a lot of time for this to occur, through changes in the income distributional aspects of Guyana’s high overall growth. Ambassador Dr. K. Hunte pointed out this aspect in discussing the use of the Gross National Income, GNI for this bump in status, GNI US$13,845.00 or higher; an unreal status symbol.
Gross Domestic Product, GDP and GNI turn out to be close, using Bank of Guyana’s GDP at basic prices data. The most serious problem that is ignored by the World Bank is its omission of the way production income benefits are spread in the economy. In Guyana’s case, a lopsided oil contract is producing a lopsided economy. Here is a summary of the 2022 results that prompted the World Bank to lift Guyana from low to high income, above Gross National Income threshold, US$13,845.00.
Using Guyana’s 2022 economic results:
GDP per capita: US$18,424 (+89.7 % in 2022).
Petroleum and gas; and support services: Value added incomes leapt by +224% over 2021:
From 2021 G$548 Billion, to 2022 G$1775 Billion.
The Guyanese that Dr Hunte is looking for, who are making well over US$13,845.00 could be found in the Petroleum and gas; and Support Services sectors.
Meanwhile, there are some sectors that the World Bank could put into intensive care for critically needed and long-term care:
Agriculture, Forestry, and Fishing rose by 37%. Each one deserves a case by case realistic analysis.
The entire non-oil Services Sector rose by only 3.5%
Of which:
Education increased by +10%; the spread from kindergarten to University level share this money income increase. If real quantity growth is uniform, then the World Bank moves may be justified.
Other money income growth are Human Health and Social Work that dropped by 15%.
Transportation and Storage collapsed by 59% in 2022.
Guyana’s real economic development status and classification as a high income country is unclear. It should be revised using a weighted average of production, cost of living, and other social services indicators that would make more sense for a World-leading Development Bank. As a 15 percent oil producing country, that is using up its Government savings to benefit employees and owners in the oil and gas plus services sector, its very high economic growth is producing lopsided development that will not help Guyana in the long run.
Faceless growth, a United Nations coined word had been used to describe the omitted income distribution factors by international money lenders. This situation is now stalking the land and producing many discordant results, including poor public transportation and reportedly high cost of living.
Sincerely,
Ganga Ramdas, PhD, MA
(Economics),
MS (Taxation US and Accounting)
