AHEAD of first-oil in 2020, the Work Bank has approved a US$35M Development Policy Credit to strengthen Guyana’s financial sector and fiscal management capabilities.
In excess of 3.7 billion oil-equivalent barrels have been discovered in eight reservoirs: Liza, Payara, Liza Deep, Snoek, Turbot, Ranger, Pacora and most recently Longtail-1, and the World Bank wants to ensure that the country is well equipped to transform its oil wealth into human capital.
“This financing provides critical support to our reform agenda and efforts to strengthen institutions and build a resilient economy that is capable of withstanding both external and domestic shocks. These reforms will be key to guide the management of oil revenues for the benefit of present and future generations,” Finance Minister Winston Jordan said in a statement.
Presently nearly one in four people in Guyana live in poverty, however, experts estimate that GDP will surge when commercial production of newly-discovered oil and gas begins. In response, the A Partnership for National Unity + Alliance for Change (APNU+AFC) Government has embarked on a series of reforms to diversify the economy and turn oil windfalls into human development and sustainable growth in the long term.
“Guyana is making important strides to promote financial resilience and improve fiscal management, and has embarked on a broad-based reform program,” said Tahseen Sayed, the World Bank’s Country Director for the Caribbean. “These reforms will be key to build a strong economy that is underpinned by a strategic management of public resources for the benefit of the Guyanese people,” Sayed added
This financing focuses on strengthening financial stability and enabling sound financial development to promote macroeconomic stability and long-term growth. In particular, it will support banking reforms and depositor protection, the establishment of a deposit insurance scheme, implementation of a new insurance law, and the country’s anti-money laundering efforts.
This Development Policy Credit, the first of a series of two programmatic financial and fiscal development policy credits, is financed from the International Development Association (IDA). ExxonMobil and its partners, Hess and CNOOC Nexen, forecast that first oil will be realised by the first quarter of 2020, initially at 120,000 barrels per day, with expected growth in production to over 500,000 barrels per day by 2025.