Eye on the Issues by GHK Lall
Sovereign Wealth Fund: it has a nice sounding comforting ring to it. It should be noticed right away that this is not a secret Swiss fund, or concealed offshore business, but a Sovereign fund. It is one that is for the 29people, housing the nation’s deposits, harnessing its future. It is a fund that must be visible, quantifiable, and palpable.
The monies that flow into SWFs are not optimally utilized if they just rest there passively. The earnings and returns are negligible, and indicative of opportunities foregone; perhaps not to return. But as opportunities are considered and explored to maximize returns, there has to be a well calibrated balance between preservation and growth, when measured against the risky and the speculative. In Wall Street parlance, high risk equals high returns; while no risk leads to little or no returns. The practice has to shun these extremes, and find the middle ground that comforts.
When the oil money starts to gush, they will come. In fact, the financial sages are already busy mapping out possible scenarios replete with ideas and strategies to be presented locally when the time is opportune. They will come with briefcases loaded with projects and projections waiting to be financed, and promising hefty dividends. It will make the eyes of the locals glaze. It might also make their mouths water at the many possibilities handed to them on a platter, the rich pickings waiting to be plucked. Many have been tempted, many have fallen.
This is the moment for caution and prudence. There must be care and resistance towards gambling; to the mesmerizing; and to the overtures about irrepressibly sure things. Some deals are just not worth having.
When Wall Street imploded approximately eight years ago, and threatened the world with financial Armageddon, all the checks and balances were trampled upon and routinely dismissed for the longest while. There was the humbling circumstance where once arrogant men, who had large heavy hands in the cataclysm, went hat in trembling hand and knees knocking to a number of the richer SWFs. They were greeted watchfully, and sometimes rebuffed outright. Those who once soared with eagles were now brought down to roost with crows.
Herein lies a lesson for Guyana policymakers and overseers. Be conservative; watch the oil proceeds with both eyes and constant attention; handle the monies as though it is one’s own, and gained the hard old fashioned way: by being earned; and engage in what is safe and sound. Do not dabble in the exotic and unknown; do not experiment; do not gamble.
Some Middle East potentates lost hundreds of millions (US) reinforcing shaky financial institutions in the United States deemed too ‘big to fail.’ To those potentates, a billion is replaceable. On the other hand, Guyana is too small to recover from speculative excesses. It must be sensible as to the non-renewable nature of its oil assets, and the near sacred trust placed in the hands of those with oversight.
This country cannot-must not-make mistakes with the disposition of what is now near at hand, almost in hand. This is a large part of the future, of exciting promise, of what can take several levels upwards, and what can secure the destiny of this un-coalesced nation. All of this can be, but only if the vision and the will and the dedication is toward doing things right, and completely so every time and from the beginning.