With the Green Paper, which sets out preliminary plans on how the Government hopes to manage the revenue from oil and other natural resources, with clear objectives of the Natural Resources Fund, being laid in the National Assembly, concerns have been raised after the Paper outlines that control for the Fund would be vested in the Finance Ministry.
Opposition Leader Dr Bharrat Jagdeo at his most recent press briefing reminded that he had initial objections to Government’s plans for the Fund but now that the Green Paper has been made public, he finds the plans to be even more worrying.
The document states that the Finance Ministry will be responsible for the overall management of the Fund, including requested withdrawals in the annual budget proposal.
“…calculating the Fiscally Sustainable Amount; drafting the Investment Mandate; entering into the Operational Agreement with the Bank of Guyana and drafting the annual report and reporting on the Fund through the annual budget,” the document said.
As such, Jagdeo said he disagrees with the Minister’s total control for various reasons, but zeroed in on Jordan’s silence on the signing bonus from ExxonMobil. “This is the same Minister who lied to the country about the US$18 million signing bonus, saying that Guyana never received it and never asked for it. He lied to Guyanese for over a year. And it is the same Minister who will now have full control.”
Meanwhile, in the document, it sets out specific rules, including the Fiscal Rule, which caters for the development gaps, both in terms of human capital and physical infrastructure, that exist and the need to accommodate development spending via the National budget.
To oversee these decisions, the Government has recommended the establishment of a macroeconomic committee which would consist of five members, including a representative of the Finance Minister.
In terms of the management of the fund, a sovereign investment committee would be responsible for advising the Minister on the investment mandate but would also include a representative.
Further, the Green Paper states that the Bank of Guyana (BoG) will be the operational manager of the Fund.
The Opposition Leader has already expressed deep concern about this proposal.
Although the Government has catered for a representative from the Opposition to sit on the Fund, Jagdeo has already objected to this proposal stating that politicians should not be included.
“We don’t want politicians… we, ourselves, to manage this money. This Fund has to be independently, technically managed … not by politicians again and stored at the Central Bank. We have a problem with that model. It departs radically from best practices, like Norway and the other countries,” he had stated.
Further, Jagdeo also criticised the Government for peddling a political assessment of the oil and gas sector. “The real substantive matters are still not being addressed,” he said, while noting that Finance Minister Jordan has been engaged in a lot of fluff talks with members of the public on this matter.
Now that the Green Paper has been laid, it paves the way for the proposed legislation on the Sovereign Wealth Fund to be laid in the National Assembly which looks at addressing two main issues: stability of the economy and saving for future generations. Advice was sought from international agencies.