Latest update January 3rd, 2025 4:30 AM
Latest News
- Mohameds drops lawsuit after Sgt. Bascom apologises over murder accusations
- More than 70 Palestinians killed in Israeli attacks on Gaza
- Govt. to retender for Amaila Falls project
- $136M estimated to construct concrete bridge at Black Bush Polder
- Govt. aiming to bring all funds for decommissioning into joint account with ExxonM
Jagdeo defends clearing out Guyana’s 2023 oil earnings
Vice President, Dr. Bharrat Jagdeo
Kaieteur News – Vice President Dr. Bharrat Jagdeo defended the government’s decision to significantly increase the withdrawal limit from the Natural Resource Fund (NRF) to allow spending of 98% of the oil revenues received in 2023. The new rule, tabled in the Fiscal Enactments (Amendment) Bill 2024, allows the use of US$1.586 billion out of the US$1.617 billion received in 2023. This adjustment leaves only US$31 million, or 2% of the revenues, for savings.
During his Thursday press conference at Freedom House, Jagdeo explained the rationale behind the revision. He said spending the revenues now “gives us a greater return than saving at this point in time for intergenerational equity, which will come later.”
Jagdeo justified the formula change by talking about the country’s development needs and the potential for higher returns through investment in the short term. “So, we believe that when you look at the sums given the size of the budget, it’s not unreasonable now to utilise a bit more from the NRF,” he said.
The decision to revise the withdrawal limits comes as part of the government’s broader fiscal strategy, which also includes an increase in domestic and external debt ceilings to finance 40% of the 2024 National Budget. The budget, standing at GY$1.146 trillion, includes a series of major infrastructural projects, including the Gas-to-Energy project.
Asked to respond to concerns about savings, the Vice President said that the new rule would ensure significant savings once revenues reach a certain level. “So, it’s not a time-bound thing. It is a quantum-bound issue,” he said.
The new formula stipulates 100% withdrawal of the first US$1 billion received last year, 95% of the second US$1 billion, 90% of the third US$1 billion, 85% of the fourth US$1 billion, 50% of the fifth US$1 billion, and 10% of amounts over US$5 billion. This approach has sparked stakeholder concerns about the balance between spending for current development and saving for future generations.
According to Jagdeo, with anticipated increases in oil production and the amortization of oil projects through cost recovery, Guyana getting more than US$5 billion annually from oil may not be so far off. He reasoned therefore that the country could soon be able to save over 90% of its annual revenues in the NRF.
With the Stabroek Block companies recovering the equivalent of the development expenses for the first three offshore projects already, they are expected to recover an additional US$12.6 billion in 2024. This would effectively repay the cost of the Yellowtail development, leaving Uaru and Exxon’s exploration drilling as outstanding recoverable items. Considering this, it is likely Exxon will recover most of its expenses early in the second half of this decade, allowing for a higher share of profit oil revenues for Guyana. However, the company continues to add new projects and it is unclear what the limit will be. Exxon officials have said that there is potential to place up to 10 floating production, storage and offloading (FPSO) vessels offshore Guyana.
Similar Articles
THE BLUNT OF THE DAY
Sports
Features/Columnists
GUYSUCO’s problems are political not managerial
Peeping Tom… Kaieteur News- The sugar industry has been for centuries Guyana’s agricultural backbone. Yet, its struggles... more
Breaking the Chains of Poverty: A need for political will
By Sir Ronald Sanders Kaieteur News- The year 2024 has underscored a grim reality: poverty continues to be an unyielding... more
Weekend Cartoon
