Guyana: Guyana Turns 60 Amid Unprecedented Growth, Institutional Weakness

What happened: To mark the 60th anniversary of Guyana's independence, President Irfaan Ali championed Guyanese sovereignty over the Essequibo region, called for national unity and promised greater prosperity.

Why it matters: Investors should look beyond the government’s optimism for clues as to the more concerning issues not mentioned in the president’s address.

What happens next: Guyana will remain a hot destination for investors, but institutional deficiencies could put the brakes on the PPP administration’s plans and prove frustrating for investors. 

On 26 May, Guyana celebrated its diamond jubilee with a symbolic flag-raising ceremony on Fort Island in the Essequibo River to underpin its sovereignty over the region coveted by neighboring Venezuela.

In a speech full of rhetorical flourishes mainly drafted by University of Guyana Chancellor Ronald Sanders (see Featured Personality), President Irfaan Ali delivered a narrative with a subtext asserting legitimacy: the historical legitimacy of the nation’s progress from colonial exploitation and division; the economic legitimacy of the PPP administration in managing Guyana's natural resources and making the country the fastest-growing economy in the world; and the moral legitimacy of the government’s affirmation of sovereignty and national unity. But there was little detail beyond the nationalistic rhetoric.

While the president did provide a tacit understanding that Guyana’s profound transformation was being driven by high investment in the oil and gas sector, Ali chose to appeal to nationalist sentiment by asserting, “The oil beneath our waters is not the property of a government. It is the patrimony of a people.”

He did not, however, go so far as to say that the oil was not the property of foreign IECs, which would have undoubtedly raised investor eyebrows.

Given that Ali also highlighted massive spending on infrastructure, STEM investments and partnerships, we expect that his administration will continue its expansionary fiscal policy, prioritizing infrastructure, education and health. In our view, the government will have no alternative but to keep the door wide open to foreign investors and will therefore continue to offer attractive fiscal terms, resisting calls to renegotiate the Stabroek PSA or take any policy steps that would appear to threaten stability or investor confidence.

In reaffirming Guyanese sovereignty over the Essequibo region and in explicitly thanking the United States for its support, we believe Ali was sending a subliminal signal that Guyana would continue to deepen its alignment with the US on security and energy and position itself as a responsible actor in the hemisphere. This would, of course, strengthen Guyana’s security posture and investment profile.

Behind the fine words, pageantry and fireworks, though, there were serious security, logistical and organizational shortcomings that were a stark reminder that governance and structural issues persist.

Almost all the cabinet and the diplomatic corps were taken to Fort Island aboard a single ferry, clustered together in a VIP section on one deck. This was not the optimal approach to ensuring VIP security, especially given the ongoing territorial dispute with Venezuela.

In addition, boarding and disembarkation were chaotic, particularly on the return trip. US Amb. Nicole Theriot was caught up in an undisciplined rush to get onto the ferry; after a lengthy delay, she was able to board only via two unstable planks. Crowd management dissolved, transportation logistics crumbled.

The absence of standard protocols and procedures for dignitaries, as well as logistical contingency planning, suggests that foreign investors should make their own security arrangements and carefully scrutinize and assess government transportation plans when attending major events.

Then there was the snafu of the giant flag failing to be hoisted for more than 40 minutes, seen by many as a metaphor for Guyana’s state of governance. For critics, as the oil money fails to improve the lives of most people, this was ample evidence that Guyana is not ready for prime time.

Our advice to investors: behind the government’s verbal and actual pyrotechnics, governance and structural issues persist. There is still a serious absence of systems, painstaking preparation, institutional memory, accountability and organizational efficiency.

The bigger picture is that, beyond the government's optimism, the lack of attention to detail and institutional capacity will slow down the government’s ambitious plans and prove frustrating for investors.