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Oil revenue fund to be restructured to rapidly improve infrastructure- Ali, Jagdeo

Last Updated on Sunday, 23 May 2021, 9:02 by Denis Chabrol

President Irfaan Ali and Vice President Bharrat Jagdeo on Saturday said that Guyana’s sovereign wealth fund would be restructured to spend the ‘oil money’ on significantly improving the country’s social and physical infrastructure.

“That is the stage we are in now- giving Guyana that opportunity to become competitive, giving us the people of Guyana the opportunity to get world-class services, giving Guyana the opportunity to get world class infrastructure ; that is the stage that we are concentrating on at this moment,” he said.

Addressing the opening of Guyana’s inaugural diaspora conference, they said legislation governing the fund, which is styled the Natural Resources Fund, would be revised to take into account Guyana’s immediate spending priorities. He promised that the NRF legislation would be revised transparently and the model would agreed to nationally.

Dr. Ali  said initially when Norway had first discovered huge quantities of oil in 1969, that European nation had spent a huge chunk of its wealth on national development. Acknowledging that the Norwegian model is a “very good model”,  President Ali  said, “what we have to understand is that Norway adopted that model after the country had a certain level of infrastructure, a certain level of service, a certain level of development and this is key.”

He said Guyana is now at that stage where the country’s infrastructure has to be rapidly upgraded to world-class standards.

With Guyana’s per capita income estimated at US$5,000 , Mr. Jagdeo said Guyana has to strive to ensure that figure increases to US$25,000 to US$30,000 in the next 10 years. “The only way we can do that is investing some of the money from the oil funds in infrastructure,”  said Mr. Jagdeo.

He further explained that while the social and physical infrastructure is transformed, some of the oil money would be saved for inter-generational equity over the coming decades and addressing immediate poverty alleviation.

The NRF Act , which was passed by A Partnership for National Unity+Alliance For Change (APNU+AFC) administration allows for the annual withdrawal of an ‘economically sustainable amount” to be spent through the National Budget and emergency financing in the event of a major natural disaster.

The legislation, which the PPP has criticised partly because it was passed by the National Assembly after the December 2018 passage of the no-confidence motion, states that monies from the NRF are to be spent on “national development priorities including any initiative aimed at realising an inclusive green economy.”

Fund management

Vice President Jagdeo said the People’s Progressive Party (PPP) is committed to managing the NRF transparently and in “an arms length way from political interference.” He restated that his administration is committed to the Santiago Principles concerning the transparency in using the wealth funds.

He restated his administration’s commitment to make it criminal for the Finance Minister and the Financial Secretary not to disclose oil resources after three months. The previous administration had been scathingly criticised for not releasing information for more than one year about an US$18 million signature bonus from ExxonMobil.

The Petroleum Commission is yet to be established and government has so far not tabled a revised or new NRF Act in the National Assembly.

Oil revenues are currently deposited in the Federal Reserve Bank in New York and the account is under the control if the Governor of the Bank of Guyana.

Since oil production began in December 2019, Guyana has earned almost US$300 million from the sale of its entitlements.