$126B oil money in oil Budget is illegal — Analysts

Feb 01, 2022 News

Kaieteur News – The legality of the use of the Natural Resource Fund continues to be a source of contention as highlighted in this year’s focus on the Annual Budget Estimates by eminent Chartered Accounting Firm, Ram and McRae.

Chartered Accountant at Ram and McRae, Christopher Ram

According to the observations, there may be conflict with the existing Natural Resource Fund Act and the way in which the money is already being used.
Senior Minister within the Office of the President, with responsibility for Finance, Dr. Ashni Singh, had in his Budget 2022 presentation last Wednesday indicated that some $126B of the $553B spending this year by government would be coming from the NRF.
Ram and McRae in its observations note however, that under Article 13 of the Act itself, it is clearly stated that, “that withdrawal from the Fund can only be used for national developmental priorities and essential projects related to natural disaster.”
It was further noted that as it is shown in the Estimates, the drawdown this year is purely budgetary support “which we double is permitted under the Act; it would seem that the most appropriate thing to do would be to include in the Estimates, a Separate Natural Resource Fund Statement.”
Opposition Member of Parliament, Amanza Walton-Desir in her presentation to the first day of the Budget debates on Monday had also pointed out that the $126B being used from the NRF was strictly for budget support.
She reminded the House that under the previous incarnation of the Act, which was passed by the then Coalition administration, monies to be utilised was supposed to have been passed through the National Assembly with an accompanying statement.
This statement, it was explained, would have outlined the specific purpose for which the money would be utilised. The Act with which the current administration replaced it with however, removed such provision, as such removing any such obligation being placed on the Minister.
Additionally, a similar sentiment over the legality and use of the funds in the way in which it is being done in Budget 2022 was raised by former Auditor General, Anand Goolsarran.
In his Accountability Watch, he observed too that Section 16 of the Act provides for the approval Assembly before any withdrawals are made from the fund.

Former Auditor General, Anand Goolsarran

As such, he contends “this raises the question as to whether the Assembly’s specific approval is not required before the amounts are involved are incorporated in the Estimates.”
Or, is it a case where once the Assembly approves the estimates it also approves the related withdrawals?”
To this end, it was contended that “…the former should be the case.”
The National Assembly was told by Dr. Singh that from the commencement of oil production in December 2019 to the end of 2021, there were 69 lifts of oil exported from Guyana, of which nine were for Government.
In March 2020, the US$54.9 million proceeds from the nation’s first lift of crude oil were deposited into the Fund, followed by the first royalty payment of US$4.9 million at the end of April 2020.
The Fund received US$185.4 million from four lifts of profit oil and US$12.9 million from royalties for the period March 2020 to December 2020.
In 2021, the Fund received US$357.2 million from Government’s share of profit oil, and US$52 million from royalties, and at the end of the year, the Fund’s cumulative balance stood at US$607.6 million.
Budget 2022, he said, proposes the first withdrawals to be made in keeping with the strengthened legislative framework governing the NRF.

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