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Govt. takes out US$300M more from oil fund
Senior Minister in the Office of the President with responsibility for Finance, Dr. Ashni Singh
Kaieteur News – The Ministry of Finance on Wednesday evening announced yet another withdrawal from the Natural Resources Fund (NRF).
In a statement, the Ministry of Finance said in keeping with the approval, the Government of Guyana has made its third transfer for 2024, totaling US $300 million (equivalent to G$62.394 billion) from the NRF on July 22, 2024 to the Consolidated Fund.
The Ministry explained in the release that the move is in keeping with the Natural Resources Fund (NRF) Act 2021, as amended by the Fiscal Enactments (Amendment) Act 2024, when parliamentary approval was granted for US $1,586,150,331 (equivalent to G$329,885,563,088) to be withdrawn from the NRF in 2024.
According to the Ministry, the transfer brings the accumulated withdrawals to date in 2024 to US $850 million equivalent to (G$ 176.72 billion within the total of the US $1,586,150,331 (equivalent to G$329,885,563,088) approved in 2024.
Earlier this year, reports indicated that the final withdrawal from the Natural Resource Fund for the year 2023, amounted to US$152.1 million (G$31.6 billion). This took the total transfers for the year 2023 to US$1.002 billion (G$208.9 billion) as approved in the National Assembly. The fund was operationalised in 2022.
The NRF Act sets specific guidelines for the use of the funds; however, there has been no indication from government as to a single project financed from this revenue stream to date.
Section 16.2 of the NRF Act explains that, “All withdrawals from the Fund shall be deposited into the Consolidated Fund and shall be used only to finance: (a) national development priorities including any initiative aimed at realizing an inclusive green economy, and (b) essential projects that are directly related to ameliorating the effect of a major natural disaster.”
Government has not identified what are the “national development priorities” being funded by the oil revenue. This is particularly concerning as the legislation features no penalties for misuse of the funds. The purpose of Guyana’s Natural Resource Fund is to ensure there is prudent management of the nation’s oil earnings for the present and future benefit of the people by ensuring that volatility in natural resource revenues does not lead to volatile public spending. With little transparency regarding the use of Guyana’s oil wealth, International Financial Analysts worry that the revenue may not be used to develop the country and improve the lives of its poor citizens.
For instance, Director of Financial Analysis at the Institute for Energy Economics and Financial Analysis (IEEFA), Tom Sanzillo had pointed out that the government has not been prioritising saving the funds generated from the industry like Norway but has instead embarked on a massive infrastructural and energy development scheme which may very well benefit its partner, ExxonMobil more than the citizens in the country. Meanwhile, the GoG previously said that money from the oil account is transferred directly to the consolidated fund which blends the various revenue streams. This means that the government is therefore unable to say what specific projects were funded by those earnings.
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