Latest update February 4th, 2025 9:06 AM
Poorly crafted rules for Guyana’s oil account perfect for meeting political needs of ruling party – Int’l Expert tells U.S. Business Channel
Kaieteur News – International Financial Expert, Tom Sanzillo does not believe that Guyana’s Natural Resource Fund (NRF) which holds the country’s oil revenues has enough safeguards to prevent it from becoming a slush fund for the ruling party.
International Financial Expert, Tom Sanzillo
During a recent interview on CNBC, the leading business and financial news network in the world, Sanzillo, along with other key industry experts and analysts, shared his thoughts on Guyana’s use of a NRF to stave off the resource curse. (In simple terms: The resource curse describes the circumstance where a country is worse off following the discovery of a new resource that dominates the economy.)
Sanzillo who serves as the Director of Financial Analysis at the Institute for Energy Economics and Financial Analysis (IEEFA) said, “The NRF is a very poor fiscal choice by the government, to put the money in a fund like this, and to not have it subjected to normal rules of accountability.” He added, “I am a former comptroller for the State of New York and I have managed both investments fund and the fiscal side of government and this is not how you manage this amount of money unless all you want to do with it is put it into the budget to meet the political needs of the party in power.”
During the period 2003 to 2007, Sanzillo served as the first deputy comptroller for the State of New York. Among his responsibilities was the management of a US$150 billion globally invested public pension fund. That fund was so well managed that it was cited by Standard and Poor’s as one of the best managed funds in the nation. Due to an early resignation of the elected State Comptroller, Sanzillo, as first deputy comptroller, served for a short period as the New York State comptroller. During that time, he also managed audit plans of the state of New York including 400 annual audits of state and local governments.
Sanzillo, who has been critical of Guyana’s Production Sharing Agreement (PSA) with an ExxonMobil-led group, reiterated those distressing sentiments. “It’s a one-sided deal,” he said to CNBC, adding, “Because Exxon pays no taxes, Exxon didn’t put up the insurance they are responsible for putting up, and Exxon has a special arrangement with a maximized profit where they get their profits first and Guyana gets theirs later.”
While the Guyana Government has acknowledged that the deal with Exxon is grossly in favour of the company, it has refused to demand a renegotiation. The government’s position is that asking for a revision of the lopsided terms will hamper investor confidence and sully the nation’s reputation on the global stage. The administration insists that Guyana must make do with what it has.
The administration has also maintained that its NRF and overarching law are not only a massive improvement over what it inherited from the APNU+AFC regime but has also received the imprimatur of the International Monetary Fund (IMF). That financial institution in its latest report on Guyana’s economic wellbeing commended the government on the structure of the fund, stating that it will allow for substantial savings to accumulate in the medium-term. It said too that annual transfers from the NRF to the budget will finance most of the increases in public capital spending to meet developmental plans. The IMF said these plans include investing in a gas-to-energy project, building new schools and 13 new hospitals to develop human capital.
- ExxonMobil, IEEFA, IMF, NRF, oil sector
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