THE history books can tell us that austere measures of Structural Adjustment started in 1988-1989 for Guyana, were the impetus to take the country to economic recovery. A testimony of the Washington Consensus Policies. Its initiation, as some would recall, was rocky, since unintended consequences of import-substitution development amplified with the oil shock of 1973. Nevertheless, the country reformed a bit and grew after at an average of 7% per year between 1991-1997. The change in government came in 1992, much to the appreciation of a country that could benefit from foreign investment and other goodwill that were gaining momentum.

Fast-forward and we are here again. As history would have it, and much to the appreciation of the incumbent, Guyana had an oil stun — ExxonMobil announced significant oil and gas finds in May 2015. The suggestion by the IMF is that Guyana, once oil begins to flow, will move from a current account deficit to an almost immediate surplus resulting from exports. Another example is, if Guyana requires the work of institutions such as the United Nations, they would have to pay these institutions (through government) for continuing their work here, as the country will quickly attain Net Contributor Country status. Investing companies and countries will increase their representation here in the form of consulates and embassies, as has already been the case…and so on and so forth. These are significant feats in themselves. Things will no longer be the same for most it is hoped, and some have begun to pop the champagne ahead of time, and I guess why not?

The caution though is to have history not repeat itself. The government has therefore taken the step to indicate it will develop a comprehensive framework to manage the oil wealth. This move is welcomed by many international agencies, aware of the challenges with managing such immediate exponential inflows. Dare I say however that it is also as critically important to avoid the missteps of the past where the institutional framework was found wanting when there was a transition from import-substitution development to export orientation under structural adjustment on the course to economic recovery. A focus on systems and institutions are therefore with full merit, despite political opposition gimmicks as charade for economic policy. Let us not discount strengthening, from the procurement commission, press freedom and the financial institutions Act to the Local Government Commission and devolutions of powers that are expected in the establishment of new towns, among others. One should not see these endeavours as separate from the wider context of institutional strengthening as a formidable part of governance that would be necessary, as was already mandated in the absence of the oil stun.

Bossogo and others in 2003 catalogued reforms of the early economic recovery. At that time, an educated guess is that the country had to move ahead with the ERP reforms in which there was no choice but to trust in public offices and officers. That did not work out well. In fact, trust is at the core of most development issues and conflict, locally. Nevertheless, it was soon discovered that the reform was just to be the preconditions and not the guarantee of economic recovery, as noted by Economist Donna Danns. Despite the economic growth in the early 1990s resulting from measures taken for economic recovery, distribution (spread of benefits) became a problem because of weaknesses in the institutional framework, among others. A typical case in point was income inequality. Collin Constantine showed for Guyana recently that despite the high growth from 1991 to 1997, by 1998 the bottom 50% income earners lost half of their mean incomes. He proved as well that the top 10% owned 41% of the total income. Additionally, the bottom 50% realised a mere 12.42% of total income by 2013. Furthermore, Constantine (2016) noted that increases in the mean incomes of the middle class were not based on ‘robust growth or a fairer distribution of income, but a collapse in mean income for the bottom 50%.’ Consequently, what that growth produced was richer and poorer Guyanese all at once. It is for this reason that distribution is so important; and the mechanism to ensure that this does not recur in the oil economy is why systems and institutions are critical.

Following from the arguments above, more widespread and pervasive similar occurrences prompted institutions such as those in the UN system to promote pro-poor inclusive green growth development strategies. And, for whatever it is worth, corruption (perceived or real) must be kept at bay. As we have also experienced, a legacy of informality and institutional weaknesses that festered corruption and hindered the trickle-down. Hence, to ensure benefits ‘trickle down’ they must be addressed institutionally for some level of system guarantee, irrespective of which government is at the helm. To this I say pop the champagne if you must, but also support the institutional developments that will ensure fairer distribution in the oil economy. (Disclaimer: These views are that of the author and do not reflect any position of the Government of Guyana.)