‘Oil money’: Govt to balance pay increases with improving quality of life- Jagdeo

Last Updated on Monday, 1 November 2021, 19:24 by Written By Denis Chabrol

Vice President Bharrat Jagdeo on Monday said Guyanese should not expect steep increases in wages and salaries from the oil money due to the risk of financial troubles like in Trinidad and Tobago where the oil production has dropped.

“Wages will go up, too, in the public service as you get more resources because, then, you can finance it but not to finance it only for the period when you have oil and when the oil disappears you don’t have a revenue stream to finance increased wages because that’s a recurrent expenditure; you have to develop the rest of the economy to ensure that the wages that you increase now are sustainable in the long-run,” said Mr. Jagdeo, an economist and former Finance Minister.  He noted that Trinidad and Tobago was now saddled with huge deficits that were damaging the economy.

He said wages and salaries would be increased, there would be “targeted subsidies” and in the long-run there would be targeted cash grants, but at the same time government workers should not expect a steep rise in pay that would eventually become unsustainable as oil production declines.

Targeted subsidies include recent financial support to children and pensioners.

The Guyana government has ignored requests by the Public Service Union to discuss proposed wage and salary increases, but has promised a pay hike for this year end. The union has said that government’s stance amounts to a violation of an agreement and international conventions governing collective bargaining.

Instead, Mr. Jagdeo said the focus is on job creation, creating “world class” education and health sectors as well as public infrastructure such as four-lane roads, cheap power, good ports and security that are all “important for quality of life issues”.

Guyana has so far earned more than US$500 million in revenues from the sale of oil, but government has so far not spent any which has been deposited in the New York Federal Reserve Bank. After the Natural Resources Fund legislation is amended in the coming months, Mr. Jagdeo said some of the funds would be spent on improving Georgetown.  “We want, in the first round, to utilise a lot of this money for infrastructure improvement. We have to spend a ton of the oil money in Georgetown too- infrastructure, drains, preventing flooding, having good roads, modernising the city, putting in parks and all of that so people start feeling that too and that in itself will generate employment and also change they way we live,” he said.

Mr. Jagdeo said more oil revenues would become available by 2025.

ExxonMobil has so far estimated that the Stabroek Block contains 10 billion barrels of oil equivalent and at least 10 oil production, storage and offloading ships would eventually be deployed in the concession.