Guyana’s oil money offshore
The billions of dollars that Guyana will earn from the oil and gas sector will be held by an overseas bank, rather than Guyana’s Central Bank; an arrangement that Bank of Guyana Governor Dr Gobind Ganga said is normal.
When asked by this publication about Finance Minister Winston Jordan’s announcement that the oil money will be held by the United States (US) Federal Reserve Bank, Dr Ganga said that the money will still be managed by Guyana.
“What Central Bank will be doing; Central Bank will be managing the fund. It’s Government funds, but it will be held at the federal reserve like any other Government fund. It’s the Bank of Guyana that opened and took the necessary steps to operationalise the fund.”
Dr Ganga was also asked about whether the funds could be vulnerable to external shocks, since it would be denominated in United States Dollars and would be offshore Guyana. There have also been cases where the US has seized funds that belonged to other countries but were being banked in the US.
“No, it wouldn’t expose the money to external shocks. It is very safe at the federal reserve. That is just part of the picture. The fund is going into the federal reserve, it’s just like funds going into the consolidated fund. So when it goes there, you utilise it [according to your determination].”
The long-awaited Natural Resources Fund Bill was assented to by President David Granger in February of this year. It is a crucial piece of legislation that is intended to create a framework for saving and investing revenue from Guyana’s oil and gas sector.
All of this will represent a monetary windfall for Guyana, which will be saved and invested through a Natural Resources Fund. Previously, a green paper on the Fund was laid in the National Assembly.
Government had released the draft Natural Resources Fund Bill of 2018, which had proposed, among other things, a 22-member Public Accountability and Oversight Committee that would oversee the management of the Fund and provide checks and balances.