World Bank seeks to ensure Guyana has effective Sovereign Wealth Fund legislation

Oct 06, 2018 News

experts as part of large team

World Bank officials are in Guyana to help develop a country strategy.

Experts from the World Bank are here to ensure that Guyana has effective draft Sovereign Wealth Fund (SWF) legislation in place before it can receive critical funding to support improvements to the nation’s financial systems.

The experts to review the draft SWF document are part of what is said to be the largest team of representatives from the various departments of the Bank.

The team met with Minister of Finance, Winston Jordan yesterday at the Ministry of Finance where they were presented with the Government’s Green Paper on the fiscal management of the SFW.

“They raised a number of points before they saw the draft, but based on the Green Paper, they were assured that a number of points that they raised are actually in the draft Legislation,” Jordan stated.

He said the Bank’s team will review the draft SWF Legislation with the Ministry’s staff and make recommendations to strengthen provisions where there is need to do so.

“This is all in keeping with our thrust to have a piece of Legislation that is as strong and as transparent as possible by the time it gets to the Parliament,” Jordan outlined.

He said that Government intends to honour its commitment to table the SWF legislation before the end of the year.

In June, the Bank had approved a US$35M Development Policy Credit to Guyana. This sum is expected to support Guyana’s efforts to strengthen financial sector development and fiscal management to better prepare to transform its oil wealth into human capital.

The final tranche under the programme supports stronger fiscal management through the SWF for intergenerational savings, better debt management, and improved public investment management.

“The Sovereign Wealth Fund Legislation forms a part of the pre-conditions for the second draw down of the balance of payment support that they have been giving us. We already got the first draw down. A second and final tranche is due in the first half of next year,” Jordan noted.

The mechanisms outlined in the discussion paper on the SWF have been deemed as too weak by critics who warned that among other things that co-mingling of funds from other sources such as mining and forestry will create structural imbalances in the economy.

It has been pointed out that co-mingling of funds does not allow for a clear public picture on how much money Guyana will actually earn from oil.