Now is time for draft legislation, not green paper – Jagdeo

Green paper

The Opposition has said Government’s Green Paper proves nothing unless they take the necessary steps to introduce draft legislation on the Sovereign Wealth Fund (SWF) which will guide how money from oil resources will be utilised for the country’s development.
General Secretary of the People’s Progressive Party (PPP) and Opposition Leader Bharrat Jagdeo said on Thursday that this is one of the reasons for the Opposition’s objection to the Green Paper, because the Opposition was expecting

draft legislation instead.
He said the time has passed for discussions on the model for the SWF, as the Government had adequate time to prepare for this sector for more than three years now.
“Now to be confronted with a discussion paper takes us right back to 2015. And so they have failed to fulfil all of their promises of creating a framework for the SWF. So we are back to square one now… Now the Government wants to solicit views,” he stated.
Another issues raised by Jagdeo is the model used in the Green Paper which ignores best practices around the world and dictates that there is minimal political involvement. Although Government has catered for an Opposition representative on the Fund, Jagdeo has already objected to this.
He said, “If this continues and that will dictate what is in the legislation, we will oppose it because it will lead to numerous problems down the road and too many political involvement.”
Jagdeo also added that the SWF would contain revenue from the forestry sector and the mining sector. “We thought this was independently transferred to the Budget…now they have a special legislation governing their holding of these funds outside of the Consolidated Fund”
He was referring to monies drawn from two other sectors. “They don’t need separate legislation. This is minimal resources… We wondered why they wanted to include those resources too from forestry and mining combining them with the monies from the petroleum sector.”
Jagdeo has also raised concerns over the total control of the Fund by the Finance Ministry. The Green Paper sets out preliminary plans on how the Government hopes to manage the revenue from oil and other natural resources, with clear objectives of the Natural Resources Fund.
Jagdeo reminded that he had initial objections to Government’s plans for the Fund but now that the Green Paper has been made public, he finds the plans to be even more worrying.
The document states that the Finance Ministry will be responsible for the overall management of the Fund, including requested withdrawals in the annual budget proposal.
“…calculating the Fiscally Sustainable Amount; drafting the Investment Mandate; entering into the Operational Agreement with the Bank of Guyana and drafting the annual report and reporting on the Fund through the annual budget,” the document said.
As such, Jagdeo said he disagrees with the Minister’s total control for various reasons, but zeroed in on Jordan’s silence on the signing bonus from ExxonMobil. “This is the same Minister who lied to the country about the US$18 million signing bonus, saying that Guyana never received it and never asked for it. He lied to Guyanese for over a year. And it is the same Minister who will now have full control.”
Meanwhile, in the document, it sets out specific rules, including the Fiscal Rule, which caters for the development gaps, both in terms of human capital and physical infrastructure, that exist and the need to accommodate development spending via the National Budget.
To oversee these decisions, the Government has recommended the establishment of a macroeconomic committee which would consist of five members, including a representative of the Finance Minister.
In terms of the management of the fund, a sovereign investment committee would be responsible for advising the Minister on the investment mandate but would also include a representative.
Further, the Green Paper states that the Bank of Guyana (BoG) will be the operational manager of the Fund. The Opposition Leader has already expressed deep concern about this proposal.
Although the Government has catered for a representative from the Opposition to sit on the Fund, Jagdeo has already objected to this proposal, stating that politicians should not be included.
Now that the Green Paper has been laid, it paves the way for the proposed legislation on the Sovereign Wealth Fund to be laid in the National Assembly which looks at addressing two main issues: stability of the economy and saving for future generations.