The Guyana Government has made its sixth withdrawal from the Natural Resource Fund (NRF), to the tune of more than $20 billion, to finance its aggressive national development priorities.
In a statement on Friday, the Ministry of Finance explained that this latest drawdown from the NRF, which is being held at the New York Federal Reserve Bank, is in accordance with the NRF Act 2021 and the approved Budget 2023.
This sixth transfer for the year saw a total of GY$20.8 billion (equivalent to US$100 million) taken out of the NRF on October 24, 2023, and placed into the Consolidated Fund.
Back in December 2021, the Government amended the NRF Act to bring greater transparency and accountability in the management of Guyana’s oil resources, including the requirement of the Government to seek annual parliamentary approval for withdrawals from the NRF as stated in Section 19 of the NRF Act 2021.
Pursuant to that provision, as part of its consideration of the budget process, the Parliament approved a total of GY$208.9 billion (equivalent to US$1.002 billion) to be withdrawn from the NRF in 2023.
Last month’s withdrawal now brings the accumulated transfers to date this year up to GY$156 billion (equivalent to US$750 million) out of US$1.002 billion. This means an additional GY$52.9 billion will have to be transferred before the end of 2023.
The People’s Progressive Party/Civic (PPP/C) Administration previously said it will continue to work aggressively through “sound and transformative investments of oil resources” from the NRF by utilising these funds in a clear and transparent manner to the benefit of present and future generations of Guyana.
Only in September, the Government reported its fifth withdrawal from the NRF, totalling GY$10.4 billion (equivalent to US$50 million).
Earlier that month, it was announced that in August and September, amounts totalling US$200 million or GY$41.6 billion had been transferred from the Natural Resource Fund to the Consolidated Fund to finance national development priorities.
These withdrawals followed another US$400 million or GY$83.2 billion being taken out of the NRF in February and May of this year.
In total, the accumulated withdrawals from the NRF thus far this year amount to US$650 million or GY$135.2 billion.
The funds in the NRF have their origins in the oil-rich Stabroek Block offshore Guyana, where United States oil major ExxonMobil and its partners are producing ‘light sweet crude’ using the Liza Destiny and Liza Unity floating production, storage and offloading (FPSO) vessels.
Last year was the first time Guyana had used oil funds to finance a national budget. In fact, in 2022, the Government withdrew a total of $126 billion (US$607.6 million) in three tranches from the NRF which went towards financing Guyana’s national development plans.
This year’s $781.9 billion budget was financed for the first time by both oil and climate funds, earned from selling Guyana’s high-quality carbon credits to Hess Corporation.
Since the passage of the NRF Act in 2021, the Guyana Government has gone on to establish the Natural Resource Fund Board.
In January of this year, the Bank of Guyana signed an agreement to officially hand over control of the Natural Resource Fund (NRF) to the Board of Directors appointed by the President.
According to Section 5 (6) (d) of the Act, the Board is required to enter into an operational agreement with the Bank, so that management of the Fund can change hands. This agreement was signed two days after the reading of the 2023 budget.
The NRF Board is chaired by Major General (Ret’d) Joe Singh. Other members of the Board are Guyana’s Permanent Representative to the United Nations, Carolyn Rodrigues-Birkett; Private Sector Executive Ramesh Dookhoo; former People’s National Congress (PNC) parliamentarian Dunstan Barrow; and former Chancellor of the University of Guyana, Professor Compton Bourne.
In August, Chairman Singh submitted the first NRF Report for 2022 in which he indicated that the NRF Secretariat is slated to be established in the second half of this year. With the establishment of the Secretariat, he noted that the operational needs of the Board will be met.
Despite the absence of the Secretariat, however, Major Singh assured that the NRF has been functioning in an efficient manner and has maintained contact and a healthy exchange of information with all relevant parties.
“The Board, through the Chairman, has been maintaining contact and exchanging information on a regular basis with the investment committee and the Public Accountability and Oversight Committee through their respective chairs and with the Hon Minister of Finance,” the Chairman said in the report.
He added, “Monthly and Quarterly Reports on the performance of the Fund received from the Bank of Guyana have been perused by the Board and shared with the two committees of the Fund. These reports and the performance of the Fund are publicised within the prescribed timelines on the Ministry of Finance’s website and in the public media in compliance with the Act.”
Under the Principal Act, the Natural Resource Fund (NRF) has an Investment and Public Accountability Committee as well as an Oversight Committee.
The NRF Board consists of five members, while the Public Accountability and Oversight Committee (PAOC) is comprised of nine members, and the Investment Committee has seven members. (G-8)
