Dr Hosein warns Guyana on overspending oil dollars

Economist Dr Roger Hosein has warned Guyana on the verge of pumping oil for the first time, not to make the same mistakes Trinidad and Tobago committed in managing its oil revenue which he said, also involved neglect of other sectors of the economy.

Hosein told an audience on Wednesday in Georgetown gathered for a lecture organised by the Guyana Oil & Gas Association, that between 1999 and 2016, Trinidad earned approximately US$90 billion in oil and gas revenues, but most of it, he explained, were poorly spent. A senior economist at the University of the West Indies, St Augustine Campus, Hosein said that of the US$90 billion collected in oil revenue, only US$5 billion exist in the country’s Heritage and Stabilization Fund whilw US$8 billion is part of the stock of international reserves.

Of the US$77 left, Hosein said that it was his view that it was poorly spent.

However, he said that the “intercept of economic activity” changed in Trinidad and Tobago, but the growth of economic activity remained the same.

Hosein said, “The Trinidad and Tobago economy today in 2017 has not grown since 2007. In fact, we had negative economic growth of 0.51 percent from 2007 to the present.

“Trinidad and Tobago is certainly an economy at the brink of a lengthy period of structural adjustment.”

Hosein went on to explain to the audience that a country’s comparative advantage evolves over time and results in changes in the weaknesses and strengths of certain sectors in the economy. And if an economy becomes stronger in the areas it can produce well, he said, it is a healthy sign for growth. However, the economist said that if in so doing, the economy is exposed to a greater amount of vulnerability from external shocks, this must be closely monitored.

Hosein warned the Guyanese audience which include economists, multilateral stakeholders and oil and gas and technocrats who attended, that intense focus on oil and gas and the related sectors of the Trinidadian economy, inadvertently resulted in neglect to other sectors.

And Trinidad and Tobago became cognisant of it, he added, but only when the price for oil and gas had tumbled on the world market.

He said that Trinidad and Tobago faces what he described as ‘Dutch disease’, which is the relationship between the increase in the economic development of a specific sector such as oil and gas, and, the accompanying decline in other sectors of its economy.

The Guyanese authorities, he said, should not make the same mistakes as others.

Oil production in Guyana is expected to begin by mid-2020.