Natural Resource Fund: Management must be further strengthened – Jagdeo

…ahead of increased money that will accumulate

While a lot has already been done to strengthen the oversight of the Natural Resource Fund (NRF), Vice President Bharrat Jagdeo has made it clear that the Government is cognisant that even more must be done to further strengthen the management system under which the fund operates, especially since the oil money Guyana accumulates will only increase.
Jagdeo made these comments during a recent press conference, where he informed the media about the discussions that were had between the Government and a group of high-level executives from some of the United States’ leading financial services companies who were on a visit to Guyana to explore the potential investment opportunities available here.
“We discussed future growth of our own markets for management of the funds in the oil and gas sector. But this is not now. In the outer years. Right now, we’re not receiving a lot of money. The fund is not a big fund. By 2027, 2028, 2030, that’s when large sums will accumulate in the fund,” Jagdeo said.
“So, we need to strengthen the capability of the Board of Directors and the management system there. The ones under the Natural Resources Fund Act, to manage it. So, it was a broad discussion about Guyana and greater financial sophistication in the future,” the Vice President added.
According to Jagdeo, it is necessary that Guyana continues to improve its financial sophistication if the economy is to grow, since they must keep pace with global advances. According to Jagdeo, “the real economy will only keep growing if we have a greater, more sophisticated financial sector.”
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 the 2022 fourth quarter oil production. Meanwhile, Guyana received payments for two lifts that occurred this year from both FPSOs.
There was also a payment of US$82.2 billion 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.
There have also been withdrawals. Last month, the Government made its second withdrawal from the NRF for 2023, intended to fund programmes under this year’s $781.9 billion budget. Minister of Finance, Dr Ashni Singh had announced the withdrawal of US$200 million ($41.6 billion) from the fund. He had assured that, in accordance with the law, this sum would be transferred to the Consolidated Fund.
Previously, the first withdrawal for this year was made in February. In December 2022, the Government had made its third overall withdrawal — US$207.6 million (G$43 billion) in oil funds — from the fund, which went towards financing Guyana’s national development plans. This had brought the accumulated withdrawals from the NRF for the year 2022 to US$607.6 million, equivalent to G$126 billion, in line with approved amount in the 2022 budget.”
In January of this year, the Bank of Guyana 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) is comprised of nine members, and the Investment Committee, 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.
Guyana is, in 2023, expected to earn a total of US$1.6 billion in profit oil and royalties combined, buoyed by the startup of ExxonMobil’s third development in the Stabroek Block – the Payara development – before the end of the year. (G3)