Dear Editor,
The recent commentary by prolific writer Dr. Walter Persaud in a Kaieteur missive ,defending Guyana’s extractive model as a triumph of “statecraft” is elegantly composed but fundamentally misdiagnoses the nature of global capital. The author suggests that by establishing a Natural Resource Fund (NRF) and commissioning vast public works, the state has “mastered” foreign capital. This is a dangerous oversimplification. History and current economic indicators suggest that rather than disciplining capital, we are currently being molded by
The author engaging in institutional window dressing points to the Natural Resource Fund and procurement reform as evidence of a “new” Guyanese state. However, institutions are only as strong as their immunity to executive override.
- The Reality: The repeated amendments to the NRF Act, which significantly increased withdrawal ceilings, prove that the “guardrails” are movable. When a government can unilaterally adjust the “savings” formula to fund immediate spending, the NRF ceases to be a sovereign wealth fund and becomes a temporary clearinghouse for political cycles. To put this in context: Relative to 2025 Income: If you compare the US—2.463 billion withdrawal to the projected US—2.54 billion earned during 2025, the government is spending approximately 97% of the total revenue earned this year. From first oil to date 60% of the NRF has vanished. Thats not “mastery”
- The Precedent: Countries like Angola and Kazakhstan established similar “state-of-the-art” transparency frameworks under global pressure. Yet, without an independent judiciary and a truly empowered opposition, these institutions became “facades of functionality” that did little to prevent the concentration of wealth.
The author celebrates “one of the fastest-growing economies,” yet ignores the classic symptoms of Dutch Disease now surfacing in the Guyanese landscape,fueling growth without vitality
- The Currency Trap: As oil dominates, the real exchange rate appreciates,as a result of weak governmental controls, leaving importers grappling with spiraling rates and limited availability,making traditional exports like rice, sugar, and gold less competitive on the global market.
- The Sectoral Shift: While “non-oil GDP” shows growth, a closer look reveals this is almost entirely driven by construction and services tethered to the oil sector. This is not diversification; it is “circular dependency.”
- Inflationary Pressure: Nationwide cash grants—while helpful in the short term—fuel local inflation. When the cost of living outpaces the “oil dividend,” the average Guyanese is left with more paper money but less purchasing power. This is the hallmark of an “overheated” economy.
- Infrastructure vs. The “Enclave” Economy
The letter describes highways and bridges as the “foundations of a post-extractive future.” Yet, history shows that infrastructure built solely to facilitate the enclave economy and the movement of capital often results in “white elephants.” The Precedent: Equatorial Guinea built world-class infrastructure that now sits underutilized because the “social capacity” (education, specialized healthcare, and technical innovation) was never actually built.
- The Concern: We are building the physical skeleton of a modern state without the organic muscle of a diversified economy to sustain it once the “easy” oil money tapers off or global prices pivot—as forecasted for the late 2020s.
Finally, it is a grand illusion of agency when the author claims Guyana negotiates Production Sharing Agreements (PSAs) on its own terms. To assert this while the lopsided 2016 PSA remains the law of the land—granting a measly 2% royalty and a staggering 75% cost-recovery cap—is a contradiction. You cannot claim to “discipline” capital when you are contractually bound to terms that favor the corporation over the citizen.
True statecraft is not the ability to spend a windfall; it is the courage to demand a fair share of the value created and the discipline to build an economy that can survive without it. Until we move beyond “extractive exuberance,” we are not masters of our destiny; we are merely passengers on a foreign-owned vessel.
Respectfully,
Hemdutt Kumar
