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Exercise restraint when pronouncing on Guyana’s priorities
– Finance Ministry tells U.S. envoy
Finance Minister, Winston Jordan
To those bilateral and multilateral partners who have something to say about the Government’s progress on the Sovereign Wealth Fund (SWF)—Exercise restraint!
This message was conveyed yesterday by the Ministry of Finance in response to an Op-ed that was done by USA Ambassador Perry Holloway. In the daily newspapers, the envoy expressed his opinions on Guyana’s move to a SWF.
Holloway said that as Guyana considers its future, it will not be enough simply to have a “rainy day fund” or even an investment fund, but to institute a revenue and investment framework that protects and effectively leverages wealth to transform the nation.
In response, the Finance Ministry said that it appreciates the spirit of the Op-ed, but wishes to make clear that the establishment of a Sovereign Wealth Fund is “already designated priority for the Government of the Co-operative Republic of Guyana (GCRG)”. The Ministry also stressed that it is the government and people of Guyana who will decide on the tenets of the SWF.
The Ministry said that the suggestions contained in the Op-ed may give the impression that the GCRG and, by extension, the Ministry of Finance, under whose remit the drafting of the legislation for the SWF falls, has not made significant progress on this important piece of legislation. That impression is misinformed.
Consequently, the Ministry reminded that the foundation for the establishment of the SWF began since 2016. This was announced more than a year ago at the opening of Guyana’s National Seminar on Preparing for First Oil, which was facilitated by Chatham House.
At that forum, the Minister of Finance, Winston Jordan made clear the Government’s intention to develop a Fund to govern the use of petroleum resources as a key legislative priority. He also highlighted the objectives of such a Fund which includes addressing issues of stabilisation of the economy.
The Finance Ministry said that the objectives reflect a comprehensive framework that will guide the prudent management of future oil revenues for the benefit of current and future generations, in keeping with the government’s agenda.
The Ministry said, “Government’s investment expenditure will be driven by the Green State Development Strategy (GSDS) – our national development plan – and, by the development priorities articulated and implemented through the National Budget, which has an established consultation cycle of its own.”
United States Ambassador Perry L. Holloway
In developing the draft SWF legislation, the Ministry of Finance said it is receiving support from the Commonwealth Secretariat. It said that a green paper on the subject will be published in 2018, and consultations will occur subsequently. The legislation is intended to be laid in Parliament by the end of 2018.
The Finance Ministry said it is important to note that as a new oil-producing nation, Guyana is ahead of many countries, having already taken the initiative to establish a Fund of this kind. It pointed out that even Norway, which today is promoted as a model country in petroleum resource management, did not create a Sovereign Wealth Fund until several years after its first oil.
The Ministry said that this of course does not mean that the establishment of such a Fund is not immediately necessary, but rather, demonstrates the government’s commitment to good governance, transparency and accountability, by ensuring that a legislative framework is in place to safeguard the national patrimony, prior to the commencement of oil production.
The Ministry of Finance, said, too, that it values the comments from its bilateral and multilateral partners on the draft content of the SWF, and welcomes further engagement and support.
“However, we would like to recommend that our partners exercise restraint when pronouncing on Guyana’s national priorities, and to refrain from making premature statements on its petroleum resource management, given the existing challenges of managing expectations and avoiding the Dutch disease.”
The Ministry of Finance said that it welcomes direct engagement with its partners as it navigates these pivotal moments in the history of the country’s development.
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