3rd February 2020
Good morning participants, IMF expert trainers and invitees.
It is certainly a pleasure to finally have the IMF team here this morning to deliver this programme, in country, on Macroeconomic Management for Resource Rich Countries. This was identified as useful, as we approached first oil. Rather than sending 2-3 persons, annually, to attend the course at IMF Headquarters, in Washington, DC, we consider that the impact of having a core 35-40 persons exposed together, at home, would certainly redound to more effective national capacity building and institutional strengthening in strategic technical areas of the Ministry of Finance, Bank of Guyana, and other key sector ministries and stakeholders.
I hope the collective thinking that is inspired by the content of this course leads, subsequently, to well- researched and thought-out technical advice from those of you here today. Indeed, the content of this programme is intended to elevate the level of thinking, discourse and analysis among the key technical agencies that contribute to compiling key macroeconomic fundamentals in the economy. Today, I am pleased to note that we have expanded our invitation to include the Bank of Guyana, the Ministry of Public Infrastructure, the Department of Energy and Ministries of Natural Resources and Agriculture. These are reflective of agencies that play key roles in designing the programmes and projects that are instrumental to the diversification efforts and institutional strengthening that must be undertaken with haste, to ensure that we are able to mitigate the detrimental impact of Dutch disease and resource curse.
Human capacity building is a critical determinant within the formula for institutional strengthening. Our ability to better conceptualise and analyse the world in which we now find ourselves, and to critically apply that knowledge to advancing informed policy proposals, thereby contributing to the macro economic stability of our country, must become part of our everyday thinking. Without competent and capable human capital, our institutions will fail to deliver as required.
Being able to contribute to development, requires us to design programmes in ways that are not inimical to macroeconomic stability. We must be able to recognize the actions the country needs to adopt, for example, to contain inflation and maintain a stable exchange rate, non-achievement of which can undermine our competitiveness in the non-oil sector. We must be conscious about the impact of the elements that contribute to Dutch disease and resource curse as a nation.
Even as we are undertaking the rebasing of the gross national product (GDP), it is anticipated that improved methodologies would improve our ability to capture growth in the economy. Additionally, much has been said about the substantial growth spike that we expect from the inclusion of petroleum – those of you who are economists know that a GDP number does not automatically translate to improved livelihood for all our citizens. Indeed, this is why we have long argued for developing countries to have a multi-dimensional measurement of development, given the inadequacies of GDP as an indicator of development and equity.
History is replete with examples which demonstrate how per capita GDP increases do not translate to improved quality of life. These exemplify the consequences of both institutional weaknesses, weak resource governance structures, and the collective behaviour of the citizenry that, collectively, have worked to exacerbate the resource curse and Dutch disease. We have an opportunity to do better and to distinguish ourselves as a country that can learn from the experiences of others, and exercise greater responsibility to allow both present and future generations to be beneficiaries of good governance. This administration has taken deliberate steps to avoid the presource curse – where several countries have spent funds long before first oil, in anticipation of future revenues. We chose to be prudent in our expenditure management. Further, through the establishment of the Natural Resource Fund, we have established a sound governance structure that will see petroleum revenues being deposited directly into the Fund. We have designed the Fund in a manner that accessing the funds is by way of a withdrawal rule. This rule is based on an analysis of both the oil and non-oil sectors. It will prevent oil price volatility from entering our economy, afford funding for national development priorities, and allow for interest-bearing investments to be made. In this way, the earnings from petroleum will benefit both present and future generations. I am proud to state that the reporting and accountability criteria within the NRF Act meet the well-established Santiago principles for transparency and good governance.
It may seem almost surreal to be a country that is considered resource-rich, especially for those of us who have worked for decades fighting the good fight for additional resources and more concessional resources. But even that definition of being resource-rich needs to be considered thoughtfully. Though we will be accessing petroleum revenues, we will be doing so cognizant of the substantial deficient in human capital resources. The factors of production – land, labour, capital and entrepreneurship – would then see two factors being seriously compromised by such deficiency, unless we manage and invest more strategically in the quality of our education.
We are still many years away from being a carbon neutral world; the demand for fossil fuel is likely to last well into next decade – possibly peaking within this decade. Climate concerns are both global and national priorities. Issues of climate change and global warming are areas we seek to address within our Green State Strategy – Vision 2040. Being green is about sustainability and improving our ability to take sustainable actions regarding production and consumption as a nation. The window of petroleum revenue generation that is afforded us is finite and comes from the extraction of a finite resource. So, it is incumbent upon us to manage this opportunity well so that, ultimately, the non-oil sectors are strengthened to ensure a resilient and diversified economy during this Decade of Development and in the decades beyond petroleum.
In this room, you represent the generation of future thinkers and leaders in supporting the management of our resource-rich economy, but cognizant of where we are resource-poor. While abundant resources are on the horizon, there are abundant needs to be met in bridging the developmental divide between the hinterland and the coastland; ensuring equal access to quality education in every region, from early childhood to secondary and technical vocational skills; ensuring quality healthcare, even as we confront regional and global emerging health challenges; expanding private sector and domestic production of goods and services; and diversifying exports.
In deploying an arsenal of policies and programmes, to address and mitigate the resource curse and expand the non-petroleum sectors, our Government continues to:
- be in active partnership in an Inter-ministerial Working Group with the Guyana Manufacturing and Services Association on expanding agro-processing and wood processing sectors. Later this year, we will be focusing on the services sector and tourism product development
- prioritise agriculture, since it remains key to ensuring food security and economic diversification across our ten administrative regions
- strengthen our manufacturing and services sectors, so vital for ensuring global competitiveness
- leverage our standing forests
- design and implement investments in catalytic infrastructure, while ensuring a robust public investment management system
- design strategic interventions in education to effect a performance-based approach to ensuring quality and equity
- focus on institutional strengthening activities across government
While the list is by no means exhaustive, in combination with good governance and public financial management, these seven (7) are key to ensuring that we emerge as a buoyant and diversified economy through the leveraging of our resource wealth to address the areas that we are resource poor. In the end, time will tell our story. Make no mistake that you are key players in that story and I expect this and other training to which you have already been exposed, will serve to make you active shapers of a history of which we can all be collectively proud. The technical quality of your work, your research, your economic modeling, your ability to design systems to support stronger institutions, and your ability to lead effective implementation, must be what drives your work ethic.
I charge you to learn and participate actively over the next five days.
It is indeed a pleasure to declare this workshop officially open.