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Parliament updated on GRIF Fund

Jul 16, 2010 News

Minister of Finance, Ashni Singh yesterday updated the National Assembly on the establishment of the Guyana REDD+ Initiative Fund (GRIF).
The GRIF is what stands between the people of Guyana and the Norwegian funding that will be paid to this country for the preservation of rainforests.
The monies expected to pass through the fund are in keeping with a Memorandum of Understanding signed with the Kingdom of Norway for the preservation of Guyana’s rainforests. The 2010 amount will be to the tune of US$30M, almost two-thirds of which will be used to purchase equity in the Amaila Falls Hydro Electric Project.
According to Dr Singh, the GRIF will support a number of high priority Low Carbon Development Strategy (LCDS) investments from 2010 to 2015.
The only thing that may stand in the way of its implementation would be if there was an agreed United Nations Framework for Climate Change or International alternative to supersede the GRIF.
Acting as trustee of the GRIF will be the World Bank, and according to Dr Singh, they will play a two-fold role in its development and subsequent operation.
In its first role the World Bank will act as the managers of the Fund, and through their treasury arm will generate further income for Guyana on the payments.
This is relative to the use of the liquid assets for specific LCDS investments.
The World Bank will also act as the Financial Intermediary Mechanism through which the monies and any income earned on them would be further invested in projects and activities that support the implementation of LCDS.
The Minister went on to point out the challenge inherent in the arrangement, in that it is necessary for Guyana to exercise its sovereignty over the decision making process with regards to the spending of the monies while still operating the fund to meet international criteria of transparency and accountability.
He said that the intent is to create a replicable model with the institution of GRIF.
The GRIF will be discharged using a type of fund called the Financial Intermediary Fund (FIF). In a recent interview Giorgio Valentini, country representative of the World Bank noted that there is a very distinct structure and organization to this type of fund.
The Donor (or donors) deposit their funds to a resource pool that is held by the Trustee – the World Bank in this case. The Trustee then has the responsibility of disbursing these funds to the partner entities as instructed.
These instructions will come from a Steering Committee that usually consists of representatives from the donor and recipient countries.
The Steering Committee may also have members from the partner entities and other organizations.
The Haiti Recovery Fund is an example of a fund organized under the FIF mechanism.
According to Dr Singh, the GRIF partner entities will be the Inter-American Development Bank (IDB), the World Bank, Conservation International, the World Wildlife Federation and perhaps other members of the United Nations family.
Partner entity is the second role that the World Bank plays in the GRIF although separate arms of the International organization will be utilized for each tier of performance – trustee and partner entity. He also pointed out that in the absence of UNFCC regulations on the governance and discharge of such funds the operational guidelines and policies of any of the partner entities would have to suffice.

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