The recent revelations that Minister of Foreign Affairs, Carl Greenidge, met with Merrill Lynch, who is likely interested in the investment feature of Guyana’s Natural Resource Fund has exposed some fundamental flaws.
This view was shared by Auditor and Financial consultant, Nigel Hinds, who said that the Government’s approach is the ‘minus 101 manner of conducting negotiations’.
“We seem to have multiple Ministers and Agencies involved in a plethora of oil issues on behalf of the Government of Guyana; this allows for convoluted and bewildering pronouncements for those representing the oil sector in Guyana, or those purporting to be doing so,” Hinds stated.
Officials of the company met separately with Minister of Foreign Affairs, Carl Greenidge and Central Bank Governor, Dr. Gobind Ganga.
Greenidge said that Merrill Lynch requested the meeting, because they may have an interest not only from a wealth management perspective, but as a merchant bank willing to lend money for infrastructure development.
“One representative meeting with a Global Entity such as Merrill Lynch, a subsidiary of Bank of America; is a lose or lose more situation for Guyana,” Hinds stated.
Greenidge had told reporters that his function as the Minister of Foreign Affairs was to listen to the Merrill Lynch executives and channel them to the appropriate agency.
“We listened to them, explained what we are doing in a variety of areas, and facilitated a meeting between themselves and the Ministry of Finance,” Greenidge stated. The Foreign Affairs Minister had indicated that the firm has the capacity and experience in the management of the equivalent of Sovereign Wealth Funds.
Hinds stated that Guyana’s focus should be on the Petroleum Sharing Agreement (PSA).
“Correcting the defective contract should be our focus; not SWF and other vague and futuristic post PSA narratives that are largely meant to deceive and cover over an unconscionable contract,” Hinds pointed out.
Merrill Lynch, the hard charging bull of the global financial services industry, was once considered the world’s largest brokerage. The firm generates wealth for its clients through a variety of investment vehicles, including the stock market.
In 2008, at the height of the U.S financial crisis, it nearly collapsed, and was acquired by Bank of America.
Government’s Green Paper on the management of oil revenues sets out that the Ministry of Finance will manage the Natural Resource Fund (NRF), which will include revenue injections from oil and gas, mining and forestry.
The Green Paper states that the Ministry of Finance will manage requested withdrawal from the fund in the annual budget proposal.
The Ministry will also be responsible for calculating the fiscally sustainable amount, drafting the investment mandate, and entering into the operational agreement with the Bank of Guyana.
Additionally, the Green Paper highlights that the Ministry of Finance will appoint a five-member Macroeconomic Committee, which will determine the economically sustainable amount for the fund.
Further, the intention is to have the Minister also appoint a seven-member Sovereign Investment Committee, which would be responsible for advising the Minister about the fund’s investment mandate.
Apart from funds being transferred to the national budget, the Green Paper notes that NRF investments are to be made in overseas markets.
The vision for this, according to the Green Paper, is that this will serve to ensure that the country has a long-term stable source of income, which will allow for the fund to meet its stabilisation and intergenerational savings objectives.
The vision articulated by Government is to have a private manager administer the overall investment portfolio.
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