Pre-production Oil Revenue Borrowing is Misguided and a Poor Economic Prescription

Mr. Lowe’s recommendation that Guyana should go the route of pre-production oil revenue borrowing is misguided and a poor economic prescription. Resource-based borrowing should not be confused with pre-production oil revenue borrowing for they are fundamental differences between the two – that main difference being timing. Borrowing on pre-production oil revenue ignores the multiple risks facing the realization of such revenues. While preliminary results show that Guyana may realize the commercial production of oil in the future, these signals should not be taken as foregone conclusions.