With billions in oil revenues, Guyana faces the ultimate test: how can the country prevent itself from succumbing to the ‘curse of black gold’? In this fourth part of our series on Guyana, we examine financial control, environmental oversight and the mechanisms for distributing oil money ‘fairly’. Conversations with the leadership of the Environmental Protection Agency (EPA) and the board of the Natural Resource Fund (NRF) make clear how our neighbouring country is seeking to cover environmental risks and structure oversight.
With the spectacular growth of offshore oil extraction, questions surrounding environmental protection and financial management are also increasing. Two bodies play a key role in maintaining the balance: the environmental watchdog EPA and the board of the state fund.
Environmental oversight: the EPA’s challenges
Guyana’s Environmental Protection Agency (EPA) faces the difficult task of monitoring the immense offshore oil industry. An important principle in its policy is liability in the event of disasters. Oil companies are required to have adequate insurance for potential oil spills. Should this insurance prove insufficient in the event of a major disaster, the strict rule applies that the parent company (such as ExxonMobil) is financially responsible for the remainder of the damage.
Yet, in practice, oversight has clear limits:
- No surprise visits: Due to the logistical complexity of the Atlantic Ocean, physical inspections are not conducted frequently. Unannounced surprise visits to drilling platforms are simply not possible.
- Satellites and whistleblowers: To compensate for this, the EPA relies heavily on satellite images to quickly detect irregularities or oil slicks in the water, combined with information from reliable internal sources within the sector.
The Natural Resource Fund
How the government handles the billions in proceeds is determined through the Natural Resource Fund (NRF). The chair of the fund’s board explained the unique governance arrangements.
Notably, the fund’s independent board has more statutory powers in certain areas than the Minister of Finance. Although the minister submits the request to withdraw money from the fund and must account for every cent in De Nationale Assemblée (Suriname’s parliament) (DNA), the fund’s board strictly ensures that the use of the resources complies exactly with the founding act. However, the board does not assess the minister’s policies; that remains the explicit task of parliament.
The rules of the oil fund at a glance:
- Securely invested: the funds are managed by the Centrale Bank van Guyana and held in a special account at the Federal Reserve Bank in New York, on which 4% interest is received.
- Budget ceiling: no more than 40% of the national government budget may come from this oil fund, in order to prevent excessive dependence.
- Dashboard for citizens: a public government dashboard provides transparent insight into all incoming and outgoing oil funds.
- Public oversight: the Public Accountability and Oversight Committee (PAOC) – consisting of representatives of religious and Indigenous communities, the opposition and the business community – reports annually and has the authority to conduct physical field visits to government projects.
The chair emphasises that the fund is still in its development phase. Guyana needs time to build up a stable buffer. In this initial phase, the government therefore needs room for course corrections and for addressing shortcomings accumulated in the past.
Despite the billions, Guyana is still not doing well
Guyana’s total oil revenues since 2019 amount to just under US$ 10 billion. Despite the flow of money, major infrastructure works, new hotels and investments in education, not everything is rosy. Since the first oil dollars came in, total national debt has risen from approximately US$ 1.8 billion to nearly the same amount as the oil revenues received.
- Political interference and consumerist behaviour: critics and the opposition point out that the NRF’s board of directors is closely linked to the incumbent government (the PPP/C). They demand a fully independent, technocratic board without political interference. They further argue that Guyana should save more money in the fund for when the oil runs out, instead of falling into the current consumerist behaviour.
- Rising cost of living: life has become many times more expensive for the average Guyanese. Basic goods at local markets have become unaffordable for many families. The population in rural areas and the interior remains below the national poverty line, with no immediate prospect of improvement.
- Pressure on the housing market: due to the enormous influx of foreign expats into the oil sector, rental and property prices in and around the capital Georgetown have risen drastically. The middle class and lower-income groups are therefore being increasingly pushed out of the housing market.
- Migration pressure and cultural change: the influx of foreign migrants – mainly from Spanish-speaking countries – places even greater pressure on employment and the resources available to the local population. In addition, this influx has a noticeable impact on the national culture.
Who really benefits?
The economic benefits are currently concentrated mainly among the political and business elite, foreign contractors and the small group of Guyanese directly employed in the oil sector or in high-value business services. For the average citizen, the promise of a leap in prosperity remains out of reach for now.
In the next and final article in this series, we look at the mirror our neighbouring country holds up to us and ask the crucial question: what is Guyana’s lesson for Suriname?
Professor Dr. Franklin S. Jabini
