I have been thinking increasingly about Guyana’s current economic challenges in a slightly different way. We have moved from managing scarcity to managing abundance.
For much of our modern economic history, the policy challenge was scarcity—high sovereign debt, limited fiscal space, inadequate foreign exchange, insufficient capital and enormous development needs. The Government of the day has a demonstrated track record in managing that type of economy: recovery from severe debt distress, restoring macroeconomic stability, rebuilding fiscal space and creating the conditions for growth.
𝗕𝘂𝘁 𝗼𝗶𝗹 𝗵𝗮𝘀 𝗳𝘂𝗻𝗱𝗮𝗺𝗲𝗻𝘁𝗮𝗹𝗹𝘆 𝗰𝗵𝗮𝗻𝗴𝗲𝗱 𝘁𝗵𝗲 𝗽𝗿𝗼𝗯𝗹𝗲𝗺.
We are no longer managing the same economy. Today, Guyana has substantially greater fiscal resources, rapidly expanding liquidity and incomes, a massive public investment programme and strong private demand. The constraint is increasingly shifting from 𝘄𝗵𝗲𝗿𝗲 𝗱𝗼 𝘄𝗲 𝗳𝗶𝗻𝗱 𝘁𝗵𝗲 𝗺𝗼𝗻𝗲𝘆? 𝘁𝗼 𝗵𝗼𝘄 𝗺𝘂𝗰𝗵 𝗺𝗼𝗻𝗲𝘆 𝗰𝗮𝗻 𝘁𝗵𝗲 𝗲𝗰𝗼𝗻𝗼𝗺𝘆 𝗽𝗿𝗼𝗱𝘂𝗰𝘁𝗶𝘃𝗲𝗹𝘆 𝗮𝗯𝘀𝗼𝗿𝗯, 𝗮𝗻𝗱 𝗵𝗼𝘄 𝗾𝘂𝗶𝗰𝗸𝗹𝘆?
That distinction is important.
If fiscal expenditure, liquidity, consumption and investment expand faster than labour supply, domestic production, infrastructure and institutional capacity can respond, the pressure does not disappear. It shows up elsewhere—in prices, wages, imports, foreign-exchange demand, execution bottlenecks and declining purchasing power.
𝗧𝗵𝗲 𝗺𝗶𝘀𝘁𝗮𝗸𝗲, 𝘁𝗵𝗲𝗿𝗲𝗳𝗼𝗿𝗲, 𝘄𝗼𝘂𝗹𝗱 𝗯𝗲 𝘁𝗼 𝗮𝘀𝘀𝘂𝗺𝗲 𝘁𝗵𝗮𝘁 𝘁𝗵𝗲 𝗶𝗻𝘀𝘁𝗶𝘁𝘂𝘁𝗶𝗼𝗻𝗮𝗹 𝗰𝗮𝗽𝗮𝗯𝗶𝗹𝗶𝘁𝗶𝗲𝘀 𝗿𝗲𝗾𝘂𝗶𝗿𝗲𝗱 𝘁𝗼 𝗺𝗮𝗻𝗮𝗴𝗲 𝘀𝗰𝗮𝗿𝗰𝗶𝘁𝘆 𝗮𝗿𝗲 𝗮𝘂𝘁𝗼𝗺𝗮𝘁𝗶𝗰𝗮𝗹𝗹𝘆 𝘁𝗵𝗲 𝘀𝗮𝗺𝗲 𝗰𝗮𝗽𝗮𝗯𝗶𝗹𝗶𝘁𝗶𝗲𝘀 𝗿𝗲𝗾𝘂𝗶𝗿𝗲𝗱 𝘁𝗼 𝗺𝗮𝗻𝗮𝗴𝗲 𝗮𝗯𝘂𝗻𝗱𝗮𝗻𝗰𝗲. 𝗧𝗵𝗲𝘆 𝗮𝗿𝗲 𝗻𝗼𝘁.
Managing scarcity required fiscal discipline, resource mobilisation and rebuilding productive capacity. Managing abundance requires a different kind of discipline: expenditure sequencing, liquidity management, stronger monetary transmission, deeper financial markets, greater institutional capacity and deliberate expansion of the economy’s absorptive capacity.
This is why I increasingly view Guyana’s oil transformation not simply as a resource boom, 𝗯𝘂𝘁 𝗮𝘀 𝗮 𝗺𝗮𝗰𝗿𝗼𝗲𝗰𝗼𝗻𝗼𝗺𝗶𝗰 𝗿𝗲𝗴𝗶𝗺𝗲 𝘁𝗿𝗮𝗻𝘀𝗶𝘁𝗶𝗼𝗻—𝗳𝗿𝗼𝗺 𝗺𝗮𝗻𝗮𝗴𝗶𝗻𝗴 𝘀𝗰𝗮𝗿𝗰𝗶𝘁𝘆 𝘁𝗼 𝗺𝗮𝗻𝗮𝗴𝗶𝗻𝗴 𝗮𝗯𝘂𝗻𝗱𝗮𝗻𝗰𝗲.
In fact, this is increasingly becoming the essence of the core hypothesis that my PhD dissertation intends to interrogate: 𝘄𝗵𝗲𝘁𝗵𝗲𝗿 𝗚𝘂𝘆𝗮𝗻𝗮’𝘀 𝗺𝗼𝗻𝗲𝘁𝗮𝗿𝘆, 𝗳𝗶𝘀𝗰𝗮𝗹 𝗮𝗻𝗱 𝗳𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹-𝗺𝗮𝗿𝗸𝗲𝘁 𝗮𝗿𝗰𝗵𝗶𝘁𝗲𝗰𝘁𝘂𝗿𝗲 𝗵𝗮𝘀 𝗮𝗱𝗮𝗽𝘁𝗲𝗱 𝘀𝘂𝗳𝗳𝗶𝗰𝗶𝗲𝗻𝘁𝗹𝘆 𝘁𝗼 𝘁𝗵𝗶𝘀 𝗳𝘂𝗻𝗱𝗮𝗺𝗲𝗻𝘁𝗮𝗹 𝗰𝗵𝗮𝗻𝗴𝗲 𝗶𝗻 𝘁𝗵𝗲 𝗻𝗮𝘁𝘂𝗿𝗲 𝗼𝗳 𝘁𝗵𝗲 𝗲𝗰𝗼𝗻𝗼𝗺𝘆.
We have accumulated considerable experience managing scarcity. 𝗧𝗵𝗲 𝗱𝗲𝗳𝗶𝗻𝗶𝗻𝗴 𝗲𝗰𝗼𝗻𝗼𝗺𝗶𝗰-𝗺𝗮𝗻𝗮𝗴𝗲𝗺𝗲𝗻𝘁 𝘁𝗲𝘀𝘁 𝗼𝗳 𝘁𝗵𝗶𝘀 𝗴𝗲𝗻𝗲𝗿𝗮𝘁𝗶𝗼𝗻 𝗺𝗮𝘆 𝘂𝗹𝘁𝗶𝗺𝗮𝘁𝗲𝗹𝘆 𝗯𝗲 𝘄𝗵𝗲𝘁𝗵𝗲𝗿 𝘄𝗲 𝗯𝗲𝗰𝗼𝗺𝗲 𝗲𝗾𝘂𝗮𝗹𝗹𝘆 𝗰𝗼𝗺𝗽𝗲𝘁𝗲𝗻𝘁 𝗮𝘁 𝗺𝗮𝗻𝗮𝗴𝗶𝗻𝗴 𝗮𝗯𝘂𝗻𝗱𝗮𝗻𝗰𝗲.