Guyana earns over $7B from interest on oil funds in 1st half of 2023 – BoG

…more interest earned in 1st half 2023 than interest for entire 2022

The United States Federal Reserve’s adjustment of its interest rates has contributed to Guyana’s oil and gas funds in the New York Federal Reserve Bank earning over $7.3 billion solely in interest income.
Earlier this year, the United States Federal Reserve increased its interest rates by 0.25 percentage points. It is a measure intended to control inflation in the US economy but has also had the side effect of increasing Guyana’s interest earnings for its oil fund held in the US bank.
According to a Bank of Guyana (BoG) report, Guyana earned over $7.3 billion from interest income in the first half of 2023. This comprises $3.2 billion in the first quarter and $4.1 billion in the second quarter when the interest rate spike occurred.
Guyana’s interest earnings from just the first half of 2023 are a sizeable increase from the interest earned for the whole of 2022. In the Natural Resource Fund (NRF) annual report of 2022, it was reported that $3.6 billion in total interest profit was received last year.
In the report, the BoG also assured that measures were taken to protect the fund from foreign currency risk. These measures include the constant monitoring of market conditions and trends.
In the first quarter of 2023, Guyana received in excess of US$300 million in payments for profit-oil and royalty, increasing the balance of its Natural Resource Fund to well over US$1.4 billion by the end of March 2023.
Based on the gazetted inflows of money for the first quarter, the Natural Resource Fund received US$377.1 million in oil and gas payments. This included a payment of US$157.6 million made in January for two profit-oil lifts that occurred last year from the Liza Unity and Liza Destiny Floating Production, Storage and Offloading (FPSO) vessels.
Meanwhile, payments dating from last year’s transactions also included a royalty payment of US$57.5 million for 2022 fourth-quarter oil production. Guyana also received payments for two lifts that occurred this year from both FPSOs.
There was also a payment of US$82.2 million for a lift of profit oil that occurred on January 17, 2023, from the Liza Destiny FPSO. There was also a payment of US$79.6 million for a lift from the Liza Unity that occurred on February 3, 2023.
In January of this year, the BoG signed an agreement to officially hand over control of the 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 consists of five members, while the Public Accountability and Oversight Committee (PAOC) comprises nine members, and the Investment Committee has seven members. When it comes to the NRF Board, it is Chaired by Retired Major General 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 June of this year, Vice President Bharrat Jagdeo made it clear that even more must be done to further strengthen the management system under which the Fund operates, especially since the oil money Guyana accumulates would only increase. (G-3)