[ad_1]
“There is no link between GDP growth and the well-being of Guyanese people” — Melinda Jankey, international lawyer
By Davina Baggott
Kaieteur News – Guyana’s gross domestic product (GDP) has soared over the past four years, largely thanks to its booming oil sector. With double-digit growth, the South American country has become the fastest-growing economy, giving the illusion of a wealthy country and its people.
International Award-winning Attorney Melinda Janki
However, award-winning Guyanese international lawyer Melinda Janki has dismissed the link between the country’s GDP growth and improved lives of its citizens. During a webinar on Sunday, “Oil Boom or Blowout in Guyana?”, Janki, who has a history of successful litigation challenging oil and gas operations locally, painted a grim reality for the country as an oil producer.
“Most of you have heard the narrative that Guyana is experiencing an economic boom, that Guyana is becoming wealthy, that Guyanese are becoming more prosperous, and these narratives are based almost entirely on Guyana’s gross domestic product,” she said.
She noted that in 2022, the World Bank stated that Guyana’s GDP grew by 62%, while the Bank of Guyana reported a 33% GDP growth in 2023. Recently, Janki stated that President Irfaan Ali declared that GDP grew by 49.7% in the first half of 2024.
“That sounds amazing, but what does it mean? The (International Monetary Fund) IMF says GDP is simply a measure of the monetary value of final goods and services produced by a country, so that includes Guyana’s oil,” the lawyer said.
She was keen to point out that much of the GDP growth was driven by the oil sector. “In 2022, the IMF, based on World Bank growth data, said that the oil sector actually grew by 124%. This is not surprising because Guyana didn’t actually start producing oil until December 2019, so Guyana was starting from a very low base,” the lawyer explained.
Jankey noted that non-oil GDP growth was about 11% that year, and that this growth trend is continuing, which was confirmed by the Bank of Guyana, which noted in a 2023 report that the oil and gas industry remains a major contributor to GDP growth. “But this does not mean that Guyana is in a better economic situation. Why? GDP includes Guyana’s oil production, but Guyana’s oil production does not go to Guyana. Nearly 90% of oil production goes to three foreign companies – ExxonMobil, Hess and CNOOC – who take the money, but it is counted as part of Guyana’s GDP.”
Explaining what causes this imbalance, she referred to the lopsided contract signed between the Guyana government and ExxonMobil in 2016. Under the agreement, ExxonMobil, the operator of the Stabroek block, gets to deduct 75% of oil production each month to repay the company’s investment. The remaining 25% is shared equally with Guyana as profit. The country also receives 2% of all oil production and sales as a royalty; this is paid quarterly.
Janki told the nearly 100 participants at the online event that oil has not made Guyana a better place and in fact, reports show that food prices have skyrocketed, forcing more people to eat from garbage cans. “The Bank of Guyana says that inflation has gone up, mainly due to food prices going up, people are eating from garbage cans… You will see more and more people sleeping on the streets,” the lawyer argued.
On Sunday, Kaieteur News Oil production from the Stabroek Block is expected to drive Guyana’s GDP growth to a staggering 49.7% in the first six months of 2024, the report said.
The Guyana government’s mid-year report also highlighted that despite challenges in some traditional sectors, the country’s non-oil GDP grew by 12.6% between January and June this year.
However, Janki believes that the growth of non-oil GDP is also related to the oil industry, and cites the construction industry as an example. This industry has achieved a growth of 43.7% in the first half of 2024, with sand and gravel declarations estimated to have increased by 46.6% and 73.4%, respectively.
Related
[ad_2]
Source link
