Finance Minister says…Natural Resource Fund Bill not perfect

Jan 07, 2019 News

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…Amendments or regulations can be added later if needed

By Kiana Wilburg

Since the passage of the Natural Resource Fund Bill, there have been concerns that the advice of international and local experts on the loopholes contained therein for risky investments were not properly addressed. But Finance Minister, Winston Jordan has addressed these concerns by stating that there is no such thing as a perfect Bill.
The economist said, too, that what is not contained in the Bill can be made into regulations. “And it is felt down the road that certain things need to be addressed then it can be amended,” added the Minister.
Jordan also said that the Bill, which is expected to receive the President’s assent this week, has received the Commonwealth’s stamp of approval. In a correspondence seen by this newspaper, the Commonwealth Economic Adviser of its Natural Resources Division, Dr. Daniel Wilde, said that the passing of the Bill represents an important milestone in the effective management of petroleum revenues.

Wilde said, “The Bill provides a strong basis for a Natural Resource Fund that will transparently manage petroleum revenues and conform to the Santiago principles. The Fund should also significantly contribute to economic stabilization, a fair-intergenerational transfer of natural resource wealth and a sustainable fiscal policy.”
He said, too, that it is very impressive that the Finance Ministry sought to put the law in place for the Fund prior to petroleum production commencing. Wilde noted that many countries have significant oil production for many years before they establish such a fund.
Additionally, the Finance Minister reminded that one of the key mechanisms in place to ensure the Fund managers do not engage in acts of corruption is the Public Accountability and Oversight Committee.
This body which will see representatives from the Media, the Guyana Bar Association and Transparency Institute Guyana Inc. (TIGI), will be responsible for monitoring and evaluating the compliance of the government and other relevant persons when it comes to the principles of transparency; good governance; and international best practices, including the Santiago Principles, when using the Natural Resource Fund.
It will also be tasked with providing independent assessments on the management of the Fund and the utilization for withdrawals from the Fund.
According to the Bill, the Committee is expected to consist of 22 members who are nominated in accordance with Part Three of the Bill and appointed by the President.
The Committee will include a representative from civil society organizations and community based organizations, a nominee to represent women with the said person being nominated by civil society organizations, a nominee of the Bar Association of Guyana, a representative of the Guyana Consumer’s Association, a nominee of the Guyana Extractive Industries Transparency Initiative (EITI), a nominee of TIGI, a nominee of the Guyana Press Association, a nominee of most representative associations of trade unions, a nominee of the Private Sector Commission, one nominee from each of the 10 Regional Democratic Councils and a nominee from academia who is nominated by the governing council of the University of Guyana.
The Bill is silent however on their being a seat at the Oversight table for a member of the political opposition.
Furthermore, the Bill points out that a person shall not be eligible for appointment if he or she is a Parliamentarian, an employee of the Ministry, an employee or owner of an organization who is engaged by the Minister or Governor of the Bank to assist with the management of the Fund, is a member of the Investment Committee established under Section 13 of the Bill or the Macroeconomic Committee that is established under Section 20 of the Bill.
One is also not eligible to be on the committee if he or she is insolvent or is, or has been declared bankrupt, is of unsound mind or otherwise medically unfit, or has been convicted of any offence not minor in nature.
The draft legislation notes that the President may terminate the services of any Committee member for a number of reasons, two of which include incompetence and misconduct.
Additionally, the Government has paved the way for the Committee to have financial resources to carry out its functions. It is also expected to publish bi-annual reports of its activities on its website and that of Parliament’s. These reports will also be provided to the National Assembly as well as the President.
CRUCIAL ROLE OF OVERSIGHT BODIES
Whether or not rules are in place, independent oversight bodies have important roles to play in holding governments to account for the management of Natural Resource Funds.
This was recently endorsed by Chatham House, a non-governmental organization based in London whose mission is to analyze and promote the understanding of major international issues and current affairs.
Chatham House explained that in many countries, the courts are explicitly mandated to determine the constitutionality of legislation and ensure government compliance with laws, including those governing natural resource fund management. Where the courts are free from political interference, Chatham House said that judicial review is a strong form of independent oversight insofar as courts are able to enforce their decisions on the government.
Chatham House said, “Some countries are not brave enough to embrace this type of independent oversight. But the evidence is overwhelming to prove that this is an extremely powerful form of ensuring transparency and accountability in the operations of the NRF. In 2008, the Timor-Leste Appeals Court found that a $290.7 million withdrawal from the Petroleum Fund by the Government was illegal. The rationale was that it violated the 2005 Petroleum Fund Law requirements that the government provides a detailed explanation for the withdrawal and that petroleum revenues be managed for the benefit of current and future generations. The Court was able to order that the money be returned to the Fund.”
Turning its attention to the importance of Multi-Stakeholder Groups, Chatham House said that some countries have established formal forms of these oversight bodies to reinforce and support the work of traditional bodies such as Parliament and the Judiciary or to provide an additional source of regulation.
Chatham House said that in Chad, Ghana, and Timor-Leste, civil society persons such as Chartered Accountants, trade unionists, traditional leaders, and central bankers, form formal oversight committees for their country’s NRFs.
The transparency body said, “Ghana’s Public Interest and Accountability Committee, for example, is mandated by law to monitor the management of petroleum revenues as outlined in the Petroleum Revenue Management Act. Timor-Leste’s Petroleum Fund Consultative Council, which consists of various civil society persons is mandated to advise Parliament on how the country views the operations of the fund as well as recommendations for improvement…”

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