Gov’t. makes first withdrawal from oil fund

May 12, 2022 News

Kaieteur News – The Government of Guyana on Tuesday announced its first withdrawal from the Natural Resource Fund (NRF), or the oil account, to the Consolidated Fund, which it said will help to finance its national development priorities.

Finance Minister, Dr. Ashni Singh

In a statement to the press, the Ministry of Finance said US$200 million, equivalent to $41.7 billion in local currency, has been transferred in accordance with Section 16 of the NRF Act of 2021. According to the Ministry, “This transfer was made in accordance with the strengthened legal architecture of the NRF Act 2021 and follows the publication in the Official Gazette of all petroleum revenues paid into the Natural Resource Fund during the period, 1 January to 31 March 2022.”

It went on to say that the NRF Act, which came into operation on January 1, 2022 represents a significant improvement in transparency and accountability and the overall management of the natural resources’ wealth of Guyana for present and future generations. The statement pointed out too that during the Budget 2022 process, Parliamentary approval was granted for the sum of US$607.6 million to be transferred during the fiscal year 2022.

The NRF Act was hurriedly passed in the National Assembly on December 29, 2022 amid an in-house protest staged by the Opposition Members of Parliament, who were clamouring for the then proposed Bill be sent to the Special Select Committee for consultations to inform the key legislation. Other members of civil society had also echoed this call but the administration ignored these views and rushed to pass the Bill.

Despite the public debate, Head of State, President Irfaan Ali, had, mere hours after the raucous session, formally assented to the Bill, thereby bringing it into law— with the final step being its publication in the Official Gazette.

Already, the Board of Directors to manage the fund have been appointed by President Ali, while the other management committees are to be set up. With regard to the use of the oil revenue, the NRF Act states that the natural resource wealth can be used to finance national development priorities, including any initiative aimed at realizing an inclusive green economy.

To this end, financial analysts believe that the fund will be used to finance its Wales Gas-to-Energy project on the West Bank of Demerara. It must be noted that the administration has not clearly outlined how it intends to expend the oil revenue, despite receiving advice that the spending of the national wealth must be done in a transparent manner. Instead, it has said that the funds will be included into the national treasury, where it will be put to use after receiving Parliamentary approval.

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