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Govt.’s Green Paper lacks provisions for informed public discussion on Natural Resource Fund – Ramson…says co-mingling forestry, mining funds erodes transparency

Aug 12, 2018 News

The Coalition government’s Green Paper on Natural Resource Fund (NRF) lacks the critical depth needed for it to be the basis of informed public discussion and debate in a country on the cusp of becoming a new oil-producing country.
This is the view of Attorney-at-law Charles Ramson Jr., who has a Master’s in Oil and Gas and completed his thesis on Sovereign Wealth Fund (SWF).
The former People’s Progressive Party Parliamentarian stated that the effectiveness of a Green Paper, which is the precursor to a white paper or legislation, should be detailed enough for ‘John Public’ to read and understand, so that the nation could have an informed debate.
“There is no explanation of the different types of Sovereign Wealth Funds and their respective purposes. There is no explanation of the different types of fiscal rules and how it is benchmarked,” Ramson stated.
He added that Guyana is about to become an oil-producing country for the first time, so most if not all of this information is not conventional wisdom and therefore government is obligated to take the extra time to explain and inform citizens.
“How will the public know and understand, so they can have a say whether they agree or disagree and make suggestions? Do governments and technical experts know everything? Is this still not the oil of all Guyanese and should they not be able to have a say?” Ramson questioned.
Government’s Green Paper on the management of oil revenues sets out that the Ministry of Finance would be responsible for the overall management of the NRF.
Ramson pointed out that the Green Paper proposes that “excess revenues” from mining and forestry will be deposited in the NRF, but makes no explanation for what “excess revenues” mean.
In addition, Ramson stated that there is no scientific justification for the depositing of other revenue from forestry and mining into the NRF.
“Co-mingling of funds does not allow for a clear public picture on how much money we have actually earned from oil and that is important for transparency so the public can hold the government accountable,” Ramson noted.
“How is it justified to place any revenue to the NRF from forestry and mining? Forestry does not suffer severe price volatility or shocks, so there is no need to have to smooth expenditure which is one of the main purposes of a stabilisation mechanism in such a fund,” Ramson stated.
Further, Ramson noted that forests are a renewable natural resource because they grow again, so it is entirely different from oil, thus the inter-generational equity principle already subsists, while mining on the other hand is a non-renewable natural resource.
“Our main mining sector is gold and gold operates as a hedge on oil low prices, so why would it make sense to include it there,” Ramson shared.
He noted that as a gold producer, Guyana was a beneficiary of the oil price collapse during the last global financial crisis, which caused gold prices to skyrocket. In addition, Ramson pointed out that gold is one of Guyana’s sectoral revenue earners, so including it in the NRF can create structural economic imbalances.

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