FROM the onset of the first massive oil discovery in 2015, Guyana has been alerted lest it succumbs to the infamous Dutch Disease- the resource curse that enables development in one sector at the expense of others.

The disease seems pervasive and many oil-rich countries around the world have succumbed to it as a result.

Take Venezuela for example, close to home. Just a few years ago, Venezuela was the richest economy in South America. In the 1990s it was actually deemed as the ‘powerhouse’ of South America and it was proven to have the largest reserves of crude oil.

But everything changed in 2014 when the global price of oil crashed. This was because Venezuela depended heavily on its oil, its sole commodity to rake in its Gross Domestic Product (GDP) earnings and the country has a heavy import bill.

Examining the socio-economic conditions in Venezuela, it is not difficult to assume that the poor living conditions coupled with the economic crisis necessitated by the poor fiscal management were fostered by Venezuela’s dependence on the oil.

As reported by the Independent, the country’s currency is practically worthless due to inflation skyrocketing by about 700 per cent, as recorded in 2017. What this translates to is that one U.S. dollar is worth (conservatively) about 8000 bolivars. For comparison, one U.S. dollar is worth about 218 Guyanese dollars.

And to illustrate just how dependent Venezuela is on oil, about 90 per cent of its GDP earnings is attributed to its oil production.

Dozens of reports also indicate that access to health services in the Spanish speaking country is a challenge, while the use of utilities (such as electricity or water) has become severely limited. Many Venezuelans are currently fleeing their homeland in search of a better life elsewhere.

Guyana, on the other hand, is a much smaller nation that was almost entirely reliant upon agriculture until it began diversifying its economy by developing other sectors and industries. Despite this, Guyana remains one of the poorest countries in the region (vis a vis its GDP), second only to Haiti.

For the little country, however, U.S. oil giant Exxon Mobil discovered the largest modern-day oil-find just offshore the country in 2015. Complimenting that initial find is the discovery of oil in six more wells. With oil production set to begin in 2020, the government of Guyana could quite possibly funnel the earnings from oil into developing the country.

But the country is confronted with the threat of the disease- the curse that causes a country to bloom and then wither away.

The disease is the negative impact on an economy caused by a sharp inflow of foreign currency (like money amassed from the production of oil) where the currency of the country appreciates but reciprocally making the country’s other products less price competitive on the export market.

When a commodity (e.g. oil and/or natural gas) takes over an economy (e.g. the Venezuelan economy) it lessens the development of or even eliminates entirely the other industries (such as the agricultural of manufacturing/ production sector), but boosts government revenue and promotes social welfare and development. When this commodity decreases, as evidenced by Venezuela, the country has already become dependent upon that sole resource and there are no replacement industries to fill the void.

Guyana can learn quite a lot, especially with regard to the oil industry, from its western neighbour, though. Guyana has been historically known as the breadbasket of the Caribbean and in recent years its gold production has been, well… shining. And with its vast expanse of pristine forests and seemingly infinite set of rivers, the country has the ability to be a top tourist destination.

It is known that oil and water cannot be mixed but what will happen to the land of many waters when its oil starts flowing?

There is constant reassurance that Guyana would not succumb to this sickness but Guyana has a history of being dependent upon agriculture. Measures must be implemented to make Guyana immune to the disease. If there’s anything good that the land of many waters can learn from its Spanish speaking neighbour, it would be to take steps now to immunise against the disease.