Govt. bypasses critical oversight provisions in NRF Act – Yog Mahadeo

Mar 16, 2022 News

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“My question is how can you plan to spend the monies without the planning and management team? Then it will leave questions about the systems of control, management and accountability of the Natural Resources Fund. As it stands no one knows what the monies will be spent on.”

By Rehanna Ramsay

Kaieteur News – The Government of Guyana has bypassed critical oversight provisions in the Natural Resource Fund (NRF) Act, with its move to allocate some $126 billion to this year’s national budget.
This is an observation made by businessman and transparency advocate, Yog Mahadeo.

Mahadeo, who is also a founding member of the civil society group Article 13, told Kaieteur News during a recent interview that the absence of critical oversight committees raises concerns about transparency, control and accountability of the government’s use of the oil funds.
The transparency advocate pointed to the NRF Act which makes provisions for a Board of Directors, an Investment Committee, and a Public Accountability and Oversight Committee –none of which were in place to help steer the allocation of the $126 billion for the national budget.
He noted too that the supplementary budget allocation from the NRF makes it difficult for citizens to track and understand how exactly they are benefiting from the oil funds.
He said, “I think the government has acted on presumption by allocating the oil monies in the 2022 budget before the team that helps determine the spending is in place.
And that is what I believe civil society is concerned about, that the budgetary allocation is in place but these boards are not, because it threads on management, accountability and transparency.”
Continuing he said, “My question is how can you plan to spend the monies without the planning and management team? Then it will leave questions about the systems of control, management and accountability of the Natural Resources Fund. As it stands, no one knows what the monies will be spent on.”
His comments come just weeks after President Irfaan Ali approved the selection of members of his party to sit on the Board of Directors for the NRF.
The government’s belated selection of members of the board was criticised by the opposition and members of civil society alike.
It was amplified that government already had a plan in place to include $126 billion from the NRF in the budget before putting in place the necessary infrastructure to guide the process.
According to the NRF Act, the Board of Directors of the fund, which shall be appointed by the President, shall be responsible for the overall management of the fund. For reviewing and approving the policies of the fund, monitoring the performance of the fund and ensuring that the general oversight of all aspects of the operations of the fund are managed in compliance with the law.
The Board of Directors is also responsible for preparing the investment mandate to include the items specified in Section 27 of the Act, which states that, “The investment mandate shall be prepared, in accordance with this Act to include directions relating to the management of credit, liquidity, operational, currency, market and other financial risks.”
The investment mandate in Section 27 states further that the mandate should be made with “directions regarding ethical investment, including policies standards; and procedures for avoiding prejudice to Guyana’s reputation as a responsible member of the world community.”
According to the Act, the mandate “shall guide the percentage of the fund that shall be invested in each eligible asset class; relevant indices for investment; eligible treasury bills and eligible commodities…”
Further, the Act provides for the establishment of an investment committee which is responsible for advising the Board of Directors on the investment mandate.
The investment team is also expected to take into account the overall objectives of the fund as outlined in the Act, which includes the current conditions, opportunities and constraints in the relevant financial markets, the need to ensure sufficient funds are available for withdrawal from the fund and international best practices in the investment portfolio management.
In the meantime, the law also makes provision for the public accountability and oversight committee, in which once appointed, some members of civil society will be responsible for providing non-governmental oversight of the fund. The list of duties of this committee includes preparing and submitting quarterly reports on the management of the fund to the Board of Directors and later to the Speaker of the National Assembly as an annual report.
During a previous interview with Kaieteur News, Chartered accountant and Attorney-at-law, Chris Ram noted that Article 13 of the Act itself, clearly states that, “withdrawal from the Fund can only be used for national developmental priorities and essential projects related to natural disaster.” However, Ram pointed out that based on the Estimates, the drawdown this year is purely budgetary support.”

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