Jagdeo points to Govt failure to properly manage SWF

…as GCCI says a lot more still to be done Guyana’s Green Paper

Moments after Finance Minister Winston Jordan took a breath from presenting an almost five-hour-long 2019 National Budget, Opposition Leader Bharrat Jagdeo blasted the coalition Government for failing to address key matters, such as the management of the Sovereign Wealth Fund (SWF), which is intended to safekeep proceeds from the oil and gas sector.
Jagdeo explained on Monday evening that the administration has failed to address and put measures in place to properly manage the SWF, as he believes it should be managed by a non-political body rather than Government.
“We argued for a non-political, an a political type of model that insulates the management of the funds from politicians, (and) the politicians get involved only when based on a formula that is in enshrined in our laws, and an independent verification that the conditions of that formula are met is presented, then that comes to the National Assembly and a release of funds is made to the budget to spend based on the budgeting prerogatives of whoever is in power, the Minister of Finance, in this case, would have a full prerogative to program those funds,” he explained.
Jagdeo argued that Jordan did not, at no point in time, address those issues, but in fact comforted the nation by saying that a Department of Energy has been set up to manage the sector and experts would be hired to “talk”.
According to the Leader of the Opposition, the Government has made the very promise a long time back, and the budget failed to bring new ideas to the forefront for the benefit of the country at large.
Jagdeo was keen to point out quite a number of avenues in which the administration failed, and pointed to job provision as a major area. He argued, “He (Jordan) has not moved the conversation forward on any count whatsoever; not on transparency issues, not on the model enshrined in the Green Paper, not on the oversight issues, not on the terms of reference between the Petroleum Commission and the Energy Department, the overlap there, not on the issue of

bidding for new contracts; none of those issues were elucidated”.

Private Sector
Nonetheless, Executive Director of the Guyana Chamber of Commerce and Industry (GCCI), Richard Rambarran, gave his take on the matter of the SWF, saying that the industry believes a lot more is yet to be done to the Green Paper.
Rambarran pointed out that he believes there are at least 10 areas of the Green Paper which ought to be sorted out before the document actually becomes legislation.
“I found that there were a number of areas where (in) about 10 specific areas a lot more work could have been done…I think that as a Green Paper we need to look at it a little bit more, and understand the dynamics and the workings and how we are going to integrate oil into this economy, and utilise the Sovereign Wealth Fund for the maintenance of a stable macroeconomic environment,” the Director shared.
He noted that among the 10 areas that deserve urgent attention by the Government are, “The composition of the macroeconomic committee, the nature of the Sovereign Investment Committee, (and) we have a couple of others in that it conflicts with laws in terms of the constitution”.
The representative who spoke with this newspaper after the budget presentation also alluded to the fact that monies that are to be expended from the SWF depend on the mechanisms of the Government, which leaves little room for reform or improvement to the current institutions in Financial Management.
Rambarran questioned, “Do we have things on fiscal deficit rules? Do we have things on the rate of revenue expenditure? Do we have rules concerning the rate of expenditure growth? Do we have balanced budget rules? Those are some of the areas in the public financial management framework where the Sovereign Wealth Fund is so critical, (and) those things are critically lacking”.
Chartered Accountant Christopher Ram had also raised concerns over Finance Minister Winston Jordan’s position as a spender and saver of Guyana’s wealth, given that he will be in charge of the SWF. Ram noted 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 last month at Duke Lodge. “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 the administration would have rebutted this, and he questioned the Government’s recommendation to have Jordan spearhead the SWF.
In a subsequent interview with this publication, Ram point out the need for transparency in the sector.
He recommended the SWF be entirely isolated from the “spending Ministry,” as it could have an impact on everyone.
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.