SWF should be entirely isolated from Finance Minister, Ministry- Ram

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Chartered accountant and attorney-at-law Christopher Ram

Chartered Accountant and Attorney-at-law Christopher Ram has raised concerns over Finance Minister, Winston Jordan’s position as a spender and saver of Guyana’s wealth, noting that under the previous administration the very matter would have drawn the attention of the serving coalition Government.

Ram raised his concerns at an Energy Forum held recently at Duke Lodge. He said, “I wonder whether they (the government) would have liked the same mechanism that they are setting out here. If another government, let’s not call the name of that other government, if another government was in place would we want a situation where a Minister who is responsible for spending is also the Minister responsible for saving and generating revenue and protecting those revenues?”

The Accountant said he is confident that the administration would have rebutted this and questioned the government’s recommendation to have Jordan spearhead the Sovereign Wealth Fund (SWF).

In a subsequent interview with this publication on Monday, Ram sought to point out the need for transparency in the sector.

He recommended that the SWF be entirely isolated from the “spending Ministry” as it could have an impact on everyone.

Finance Minister Winston Jordan

Ram also pointed to the need for an “entrenched article” in the constitution so that no one, including Ministers, would be able to access those funds, as he described it as a generational fund for the future.

Opposition Leader, Dr Bharrat Jagdeo had earlier this year made similar comments on the issue at one of his weekly press conferences.

He said, “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.  There have been no substantive moves in any of these directions.   As I have said before there is no clear management framework for the oil and gas sector.”

Jagdeo had made it clear that he disagrees with the Finance Minister being given control over the fund 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, the Green Paper aimed at establishing the SWF 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.

Opposition Leader, Dr Bharrat Jagdeo

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, document 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.

A 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.

Guyana’s SWF Bill was drafted by the Commonwealth Secretariat with input from the government and presented to the subject Minister in December, 2016.

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