Ramson wants Govt, Opposition MPs to appoint representatives

SWF

Three years after the first major oil find by ExxonMobil, the Government is yet to set up the Sovereign Wealth Fund (SWF) now termed the Natural Resources Fund (NRF), but the importance of such a fund has been underscored by former Member of Parliament (MP), Charles Ramson.
In delivering a presentation to a small audience at Duke Lodge on Wednesday, an event organised by the Georgetown Chamber of Commerce, Ramson said there is need for both sides of the political divide to be point persons on the fund. He has recommended that three persons from each side of the House be chosen to represent their party or side on the SWF, to ensure that it is properly managed.
He said, “Each team of three should be supported by one technical person and they should be responsible to take all the briefings, overseas visits, among others. They should make the SWF their focus and should also hold the responsibility to

brief their party on the status and progress. They should also have the responsibility to engage with public consultations and report the feedback.”
Ramson therefore called for a bipartisan political system to develop Guyana’s SWF. However, Ramson noted, that the Norwegian model isolates or insulates any kind of political interface save and except for the types of assets they invest in and the rage or percentage of the share allocation for the respective assets. According to him, it’s strictly done as a business to maximise returns.
Ramson said setting up an SWF is important than spending for what is yet to come. In advancing the arguments that Guyanese must have some knowledge and input into how the revenues from oil are spent, he said it would not serve the country well if Government relinquished the funds to overseas experts or people who don’t have Guyana’s best interest at heart, as it could go to squander.
During his presentation, Ramson focused on several examples of SWF and reinforced his message that Guyana needs one. He focused much of his presentation on the similarities between Ghana and Guyana’s offshore oil operation and Norway’s SWF. He said Guyana should set up its SWF early to mitigate the volatility of oil revenues and better manage their fiscal budget positions.
He also used the Kingdom of Norway’s SWF as an example and how they managed to get to a point where they have huge sums of liquid cash saved from the industry. On the contrary, he pointed to the example in Papua New Guinea, where although there was an existing SWF, political interference and massive drawdowns led to the collapse of that fund.
In the short-term, Ramson recommended a parking fund and stabilisation fund combination. He said stabilisation volatility fund aims to smooth Government expenditure despite having revenue instability based on moving long-term average. The parking fund, according to him, is the depositing of funds overseas while building up the necessary State institutions and systems to spend appropriately.
Public Infrastructure Minister David Patterson has said that the NRF will be tabled and hopefully passed and supported this year. “I am satisfied, and in Cabinet we had a full update on one outstanding issue and it will be here and in place long before any oil is drilled as well as the local content policy. Before the end of the year, both will be up and running,” Patterson told a news conference two weeks ago.
In January, Natural Resources Minister Raphael Trotman promised the legislation by the first quarter in 2018, but it is yet to be delivered.
The Bill was drafted by the Commonwealth Secretariat and scrutinised by the International Monetary Fund (IMF), the World Bank as well as the Inter-American Development Bank (IDB).
The Natural Resources Fund aims to save funds for future generations; one way includes converting non-renewable assets into a more diversified portfolio of assets and to mitigate the effects of “Dutch Disease”.
A SWF is defined as pools of money derived from a country’s reserves, which are set aside for investment purposes that will benefit the country’s economy and citizens.
The funding for a SWF comes from Central Bank reserves that accumulate because of budget and trade surpluses, and even from revenue generated from the exports of natural resources.
Guyana’s international partners and others have urged that the fund be transparent, independent and non-partisan to better protect the Guyanese people. (Samuel Sukhnandan)