The draft legislation to establish Guyana’s sovereign wealth fund will be placed before the National Assembly before December.
This was disclosed by Minister of Finance, Winston Jordan who said that “We have committed in the budget that this legislation will be put to Parliament before the end of the year; we have committed to that. This is June and based on our timetable we are still within the timetable we have committed to.”
In an interview with the Department of Public Information (DPI), the Finance Minister said since 2016 the government has been receiving help from the Commonwealth Secretariat to draft the legislation for the fund, and following consultations with various experts, a draft has been prepared. The fund is being set up to collect and save the considerable revenue accruing from the offshore oil bonanza expected to begin in early 2020.
“The Commonwealth has provided one expert and he has given an audience to the Cabinet about it. Cabinet has mandated me to submit a draft to the Attorney General about four weeks ago. I have handed it to the Attorney General to put it into legal language and when he is finished with that it will formally come to Cabinet for discussion and then further adjustments and then it will be put out to the public for consultations,” Minister Jordan added.
A Sovereign Wealth Fund (SWF) is a state owned investment fund that is made up of surpluses from official foreign currency operations, proceeds of privatisations, governmental transfer payments, fiscal surpluses and/or receipts resulting from resource exports.
It was articulated as an important mechanism for the oil and gas sector and with ExxonMobil announcing that production would start in 2020, calls have been made by stakeholders and the political opposition for its establishment to be swift.
Opposition Leader Dr Bharrat Jagdeo had said that two years is enough time for the coalition Government to set up a Sovereign Wealth Fund (SWF) for the oil and gas sector, while adding that the slow pace has not gone unnoticed.
In March of 2017, Minister of Natural Resources, Raphael Trotman had said that the public would have the opportunity to comment on the Guyana Sovereign Wealth Fund Bill as it was handed over to the Minister of Finance who will be responsible for tabling it in the National Assembly, since then.
Concerned at the slow pace also was US Ambassador to Guyana Perry Holloway who, in an opinion editorial this year, called for priority and more so public consultations to be given in the establishment of a SWF to manage the revenues expected from Guyana’s oil production.
Jordan who was not pleased with the concerns raised by the Ambassador had in a statement said that it gave the impression that the Government and, by extension, the Finance Ministry, under whose remit the drafting of the legislation for the SWF falls, has not made significant progress on this important piece of legislation.
As it pertains to the establishment of the SWF, the Opposition Leader noted that on multiple occasions he “urged that Government take cognizance of the Santiago Principles and a model similar to the principles on which the Norwegian model was developed. The establishment of a Sovereign Wealth Fund is only one element of a management framework for the sector. I have said before that there should be no ministerial involvement in the Petroleum Commission; that the remaining oil blocks should be subject to a competitive auction or kept for future generations; and that we should complete the work on the Local Content framework.”