By Luc Cohen / Reuters

Petroleumworld 01 22 2020

Bankers are “bombarding” Guyana with offers of financing backed by future oil production, the finance minister told Reuters, but the South American nation is rejecting the proposals to avoid the excessive borrowing that has plagued other oil producers.

As the former British colony begins its first significant oil production this year, it is wary of avoiding the mistakes made in oil-dependent economies such as Angola, Nigeria and its economically collapsing neighbor Venezuela.

Winston Jordan, an economist and career public servant, also cited Guyana's own history of economic crisis in the 1980s for turning down overtures to finance infrastructure and development before oil money started flowing.

“At the IMF meetings, I was bombarded, at the IDB meetings, I'm bombarded with people telling you how much money they can lend you,” he said in an interview on Wednesday in his Georgetown office, referring to the International Monetary Fund and Inter-American Development Bank.

He declined to name the specific institutions, saying only that “quite a few banks, quite a few middlemen” offered loans of between $500 million and $2 billion.

During the oil boom years, Venezuela borrowed more than $50 billion from China through loans that were repaid in oil shipments, a practice later replicated in Ecuador. The arrangements were criticized for lack of transparency.

A consortium led by Exxon Mobil ( XOM.N ) has discovered more than 6 billion barrels of oil and gas off Guyana, a find that could transform the impoverished country's agriculture- and mining-dependent economy.

With fewer than 800,000 inhabitants, Guyana is seen as a test for whether oil revenue can spur sustainable development in a country lacking strong institutions.

Other petrostates have seen crude sales lead to corruption and debt-fueled spending binges, often described as the “resource curse.”

Guyana in the early 1980s defaulted on foreign debt, fueling an economic crisis characterized by chronic shortages of consumer goods. Following economic austerity and debt relief, the economy began recovering in the 1990s.

“I much rather that we slowly ramp up,” Jordan said. “We will avoid resource curse.”

Legislation this year established that Guyana's oil revenue will flow to a sovereign wealth fund, and withdrawals must fund specific projects rather than day-to-day expenses. Committees to oversee the fund have not been formed because the opposition and the private sector have not named representatives, Jordan said.

The opposition People's Progressive Party has said President David Granger's government overstepped its authority by forming the fund, given its “caretaker” status after losing a 2018 no-confidence vote. The opposition is promising a new sovereign wealth fund “insulated from political interference.”


Additional reporting by Neil Marks; Editing by Bernadette Baum from Reuters. 01 20 

Original Post
ksazma posted:

Jordan is a fool. Nothing wrong with loans. The problem is that the incompetent PNC would just squander them like they did the last time.

I think he is being pragmatic and prudent.  This is why they rejected the Chinese bridge proposal. The Chinese see oil money. Two years ago they did not accept Exxon’s offer to build a pipeline and deliver gas free to Guyana. They don’t want to compromise negotiations regarding gas.

The PNC trying to avoid missteps.

Mitwah posted:
Prashad posted:
ksazma posted:

Jordan is a fool. Nothing wrong with loans. The problem is that the incompetent PNC would just squander them like they did the last time.

Ksazmarab, why don't you take out lots of loans then

He is just an average book-keeper.

Don't bother with him. When the creditors call him on the phone for their money. He is probably planning to say 'I is China Chinaman I no speak English' Then he will put the phone down.

Last edited by Prashad
Zara posted:

Example of the responsible nature of comrade Granger govt.  This is what Guyana need. The opposition have no such control of themself.  Comrade Granger must continue the revolution.

This is funny rass, now you gone make a certain fella revolt... is like lighting fire on his arss. 

Now Comrade Zara, Why is Granger in a revolution gal. You en doing Nagaaa any justice hay, he should haul two bax at you rass. 

Add Reply


Link copied to your clipboard.