By Vishani Ragobeer
Guyana’s Natural Resources Fund (NRF), which holds the revenues earned by the country from the sale of its share of oil being produced offshore, could increase to US$500M (or GY$104.5 billion) by the end of 2021, according to the quarterly bulletin of the Inter-American Development Bank (IDB).
The IDB noted that the prospect of further oil discoveries continues to improve prospects for Guyana in the medium-term; oil giant ExxonMobil has already updated its development plans for its operations at the giant oilfield called the Stabroek Block.
Already, the IDB highlighted that the government has received US$267 million for oil sales and royalty payments through 2020 and March 2021.
The revenues received by Guyana have been saved in the NRF but have not been part of the 2020 Emergency Budget nor the 2021 National Budget, since the current government has announced plans to modify the NRF, which was instituted by the previous administration. The funds in the NRF are kept in the United States Federal Reserve.
“With Brent crude oil at more than US$60 a barrel and the expectation of oil production increasing by 46.7 per cent in 2021, government oil revenues could significantly increase this year,” the IDB said, detailing that it is possible for Guyana to receive US $263 million this year, taking the balance of the NRF to approximately $500 million by the end of 2021.
Generally, despite the impact of the COVID-19 pandemic and the 2020 elections impasse, the IDB acknowledged that Guyana remains the only country in the Caribbean with a positive growth rate. This positive growth is underpinned by the burgeoning oil and gas sector.
As the International Monetary Fund (IMF) projected, the IDB related that Guyana’s GDP is estimated to grow by 20.9 per cent.
“The main driver of GDP growth was oil production, which represented 37 per cent of GDP and accounted for 51 per cent to overall GDP growth,” the IDB said, highlighting that “Although the non-oil economy contracted by 7.3 per cent.”
Additionally, the IDB said the central government’s overall deficit is approximately US$434 million or 9.4 per cent of the country’s non-oil Gross Domestic Product (GDP) in 2020 and approximately 7.4 per cent of the total GDP. The total public debt also increased to US $2.6 billion, or 47.4 per cent of GDP.
Beyond just Guyana, the IDB, in a press release, highlighted, “The extreme uncertainty surrounding the tourism recovery in the Caribbean highlights the importance of boosting innovation and supporting transformations that align tourism destinations and products with post-pandemic global demand trends.”
It has been widely reported that the tourism sector in the Caribbean has been devastated by the COVID-19 pandemic due to travel restrictions implemented and safety concerns raised. And, with the exception of the commodity producers in the region (Guyana, Suriname and Trinidad and Tobago), Caribbean nations depend heavily on tourism to sustain their economy.
“Most global tourism reports predict a 2-to-4-year period for a full recovery to 2019 levels. However, the Caribbean could either lead or lag the global recovery, depending upon the specific circumstances in the main Caribbean source countries and in Caribbean destinations themselves,” the IDB highlighted.
In imagining a post-COVID Tourism Recovery trajectory, the IDB noted that consideration must be given to key drivers of tourism demand in the short term, including the evolution of the pandemic and the COVID-19 vaccination roll-out, the economic environment of source countries, the split between business versus leisure tourism, and airline capacity, among others.
“Over the longer term, Caribbean countries must spur innovation and reinvigorate their tourism offerings,” Tourism Lead Specialist at the IDB, Olga Gómez was quoted as saying.
He continued, “It is no longer enough to depend on the lure of splendid beaches. Tourism destinations need to invest in improving their competitiveness, aligning their tourism products to the broader local and global economic trends, and exploring new and traditional emerging market segments such as global nomadism or nature-based tourism.”
Specifically, on the less-tourism-intensive economies of Guyana and Suriname, the IDB underscored that there is room for improving the sector’s contribution to growth and employment in the coming years.
For Guyana, the quarterly bulletin highlighted that prospects for tourism- especially the renowned ecotourism- remain positive.