The South American country needs to spend its windfall wisely
probably heard of the resource curse, when a country is overwhelmed by a windfall from selling commodities. The tiny state of Guyana, on the north-east corner of the Amazon, is about to become one of the most extreme cases of recent times.
Change would certainly be welcome. The country is poor. Life expectancy is low by regional standards and corruption is a problem. Although Guyana is a democracy, it is deeply divided, as two ethnically orientated parties compete for power: the largely Indo-Guyanese People’s Progressive Party and the Afro-Guyanese People’s National Congress Reform. And even as it is the first petrostate created during the energy transition, Guyana is vulnerable to climate change.
Another option is to distribute the oil rents direct to the population. That puts power in the hands of the people but with a potential pay-out of over $10,000 per person each year, it is sure to trigger a consumption-and-import binge. This would destabilise an economy that has only limited infrastructure and minimal productive capacity. Hard choices are bedevilled by divisive politics. The government and opposition are already at loggerheads over the cash.
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