Legislation to restructure Natural Resources Fund likely this year – Finance Minister
The Government has started looking at possible legislative amendments to restructure the Natural Resources Fund (NRF), Senior Minister with responsibility for Finance in the Office of the President, Dr Ashni Singh has said.
The Natural Resources or Sovereign Wealth Fund (SWF) to date, has over US$185.3 million, representing both revenue and sales from Guyana’s four oil lifts for 2020.
Sharing Guyana’s economic prospects with LatinFinance on Wednesday, Dr Singh said the Government has identified several issues with the Fund’s design and will be making moves to reform the account held at the Federal Reserve Bank in New York.
“It’s very likely during the course of this year that we will be bringing legislations to the Parliament to restructure the Fund, to strengthen the way it operates and the way that it is governed, to strengthen the transparency with which it operates and to ensure that it is designed and operates in a manner that addresses the immediate economic development needs of the country and its long-term sustainability,” Dr Singh told the virtual Guyana Finance and Investment Roundtable.
Noting that it was still in its early days, the Finance Minister said Government is currently considering the final design that will be taken to Parliament.
“I wouldn’t want necessarily to pre-empt the final design, but our main objectives would be to ensure that we have a Fund that … the revenues that are generated from the oil and gas sector are used in a way that is consistent with long-term sustainability and resilience of the economy into the long term. We are still very much in the process of considering what the amendments to the legislation will look like.”
Dr Singh would only divulge that the Fund will be managed in a way consistent with the highest standards of transparency and in accordance with the “paramount economic objectives of sustainable economic development.”
The Natural Resources Bill No 14 of 2018 was tabled in the 11th Parliament in November 2018 by the former Government.
Without the vote of the then PPP/C Opposition, the Act was later passed in the National Assembly and assented to by former President David Granger.
The Bill set out to establish the Natural Resource Fund to manage Guyana’s natural resources wealth. The purpose of the Fund is to “manage the natural resource wealth of Guyana for the present and future benefit of the people in an effective and efficient manner by
(a) ensuring that volatility in natural resource revenues do not lead to volatile public spending;
(b) ensuring that natural resource revenues do not lead to a loss of economic competitiveness”.
The Bill said Petroleum revenues shall be directly paid into a bank account denominated in United States of America dollars and held by the Bank as part of the Fund.
Petroleum revenues shall include all revenue from royalties, whether paid in cash or in kind; Government’s share of profit oil received under the terms of a Production Sharing Agreement or other agreement; Government’s share of profit gas received under the terms of a PSA or other agreement; and any income tax or corporate income tax levied on the profits of companies or individuals undertaking production operations, among other measures.