Latest update December 4th, 2024 2:40 AM
Caribbean Economist stresses importance of having legislation around sovereign wealth funds
… To ensure proper management, invested wisely
Kaieteur News – Caribbean Economist, Marla Dukharan on Friday underscored the importance for Caribbean countries to not only establish a Sovereign Wealth Fund (SWF) but to also have legislation around it to ensure that the funds are managed properly and invested wisely.
Caribbean Economist, Marla Dukharan
For those unfamiliar, a sovereign wealth fund is a state-owned investment fund comprised of money generated by the government, often derived from a country’s surplus reserves.
Last Friday, Dukharan participated in a high-level conference hosted by the World Bank and the Eastern Caribbean Central Bank (ECCB) in St. Kitts and Nevis. The conference was based on “Building Resilience through Sustainable Development Financing in the Caribbean”.
During a panel discussion Dukharan was asked to outline priorities that would promote debt sustainability and help unleash the development potential for the Region. She first highlighted that every Caribbean country should have a sovereign wealth fund where countries can “save some money in a particular way that is govern properly.”
The economist stated that countries like: Guyana, Suriname, and Trinidad & Tobago, all have sovereign wealth funds, adding that Turks & Caicos Islands have signalled its intention to implement a SWF.
With Turks & Caicos not being a resource rich country, the economist noted that not only resource rich Caribbean countries should establish such fund.
Expounding further she said, “And the reason that it is important is that it creates a stable, transparent and well governed mechanism to manage the resources that are saved and deploy for development needs.”
However, Dukharan shared that while having a SWF is important, without proper management it can lead to negligence. She explained that while her country has established a SWF, the successive governments of T&T only managed to save under US$3B.
“At one point the sovereign wealth fund stood at around US$8B so that just goes to show the power of investing wisely and compounding of course,” she added. As such, the economist stressed the importance of having legislation to govern the sovereign wealth fund to ensure proper management of whatever money is saved and also to ensure that the monies is invested wisely.
Dukharan, is a point of reference for monitoring regional developments and country-level economic performance, and is known for leading discussions and publishing reports on the Caribbean implications of global geopolitical developments. She is a highly sought-after speaker for key industry, multilateral, and academic conferences on a regional and international scale, and she regularly advises investors and private sector Boards of Directors in the Caribbean.
GUYANA
Guyana has a Natural Resources Fund (NRF), which commonly referred to as the SWF.
Just last week, the Government of Guyana announced that it has withdrawn G$41.6B from the NRF and transferred it to the Consolidated Fund to finance national development priorities. The Government’s first withdrawal of 2023 was done in accordance with the Natural Resource Fund (NRF) Act 2021, following the passage of Budget 2023 in the National Assembly. According to the Finance Ministry, US$607.6 million was withdrawn from the NRF in 2022.
Kaieteur News had reported Director of Energy at Americas Market Intelligence (AMI), Arthur Deakin, highlighting that while Guyana has established a legislative and regulatory framework to manage its oil revenues, a deeper analysis exposes that the checks and balances implemented are closely tied to the Executive branch – alluding that this does not bode well for transparency and accountability.
Deakin explained that Guyana has implemented an NRF legislation which allows for a Board of Directors, an Investment Committee and a Public Accountability and Oversight Committee. Expounding further, he said most of the members appointed to the committees responsible for the management of the oil monies have either been appointed directly by the President or chosen by the National Assembly, where the President’s party has a majority. Deakin said this prevents the much-needed separation between political influences and the billions of dollars flowing into the country.
- and Trinidad & Tobago, Caribbean Economist, Dukharan, Guyana, state-owned investment, Suriname, SWF, T&T
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