NRF withdrawal cap – bigger fund, smaller cap (not 99%)

Dear Editor,
“The new NRF rule doesn’t ‘take 99%.’ It’s a cap that tightens as the Fund grows. We’re using our revenues to build – while keeping debt under 30% of GDP. That’s fiscal responsibility, not depletion.”
Key Points
The amended NRF formula is a cap that scales with fund size and production; it does not enable depletion.
The higher the Fund’s balance, the lower the effective withdrawal rate – by design.
Example: On US$6B: old rule cap = 23%; revised formula ceiling = under 75%, calibrated to production rising from ~120,000 bpd (Dec 2019) to 600,000+ bpd (2024/25).
On US$12B: maximum effective withdrawal rate = 41%. As the Fund grows further, the effective cap declines.
Policy intent: minimise borrowing, keep debt-to-GDP under 30%, and match investment to rapidly rising inflows; in effective terms, the withdrawal rate is virtually unchanged relative to the old rule.
The “99%” claim is false and not supported by the formula.
Myth vs Fact
Myth: The opposition leader claims, “The government changed the law to take 99% of the Natural Resource Fund.”
Fact: The new rule is a moving cap tied to the projected growth in the Fund’s size and production. On US$6B the ceiling is under 75%; on US$12B it’s 41%; and the effective cap tightens as balances grow. No depletion clause.
Production Timeline (Context)
Dec 2019: first oil; ~120,000 bpd.
2024/25: sustained 600,000+ bpd.
2030 (planning horizon): ~1.7 million bpd capacity as additional FPSOs come online.
I’ve heard the line: the government “changed the law to take ninety-nine per cent of the Fund.” It sounds explosive. It’s also wrong.
The revised NRF rule is a cap, not a syphon. It scales with reality – the size of the Fund and the volume of production – and it tightens as the Fund grows. Bigger balance, lower effective withdrawal rate. That’s by design.
Now for the maths. On a US$6B balance, the old formula capped withdrawals at 23%. Under the revised rule – calibrated to oil output rising from 120,000 bpd in 2019 to 600,000+ bpd in 2024/25 – the ceiling is under 75%, not 99%.
At US$12B, the new cap is 41%, while the old formula would lock it at 13%.
And here’s the kicker: as the fund grows, that effective cap keeps falling. No “99%”. No raid. Just a rule aligned with production growth and fiscal prudence.
Why adjust the cap? Because Guyana is rapidly transforming. Output is expected to peak at nearly 1.7 million bpd by 2030, more than double the current output level. Freezing a smaller-economy cap in a much larger economy would push us into more foreign borrowing to finance the national budget. Therefore, the reform enables the utility of more of our own cash now, saves more as the Fund grows, and pays less in interest – all while keeping debt under 30% of GDP. That is fiscal discipline, not depletion.
Why adjust the cap? Because the economy is rapidly transforming and expanding. Oil output is set to peak near 1.7 million bpd by 2030 – more than double today’s level. Freezing an old cap in a booming economy would force more foreign borrowing to fund the budget. The reform fixes that: use more of our own cash now, save more as the Fund grows, and pay less in interest – all while keeping debt under 30% of GDP.
That’s not depletion. That’s fiscal discipline in action.
Governance still matters. Transfers are published, debated, and scrutinised – as they should be. But politics shouldn’t replace arithmetic literacy. The new formula is a guardrail, not a getaway car. Bigger fund, smaller cap. Build more, borrow less. That’s how you turn oil into broad-based prosperity without mortgaging Guyana’s future.

Yours sincerely,
Joel Bhagwandin