Latest update May 13th, 2024 12:59 AM
Sep 09, 2021 News
Kaieteur News – There are two sides to transparency, says Arthur Deakin, a Co-Director of Energy Practice at consultancy Firm, America’s Market Intelligence (AMI). On one hand, Deakin says that there is transparency in what one says they will do. But the other side of that, and perhaps the more important aspect, is what was actually achieved.
It is against this point that Deakin said in an interview on Kaieteur Radio’s Guyana’s Oil & You last week that the government touts about being transparent, but its actions are suggesting the opposite.
“I think that this government is very good at creating a very good image of transparency and accountability, but they are not always following through with those promises, and I think that that is where people might get distracted,” the International Analyst said.
Deakin went on to refer to the current legislation that was passed in 2019 by the APNU+AFC administration, which governs the Natural Resources Fund (NRF). He said this legislation gives the Minister of Finance “too much” influence in the utilisation of the fund. Notably, the People’s Progressive Party/ Civic (PPP/C) government has signalled its intentions to update the oil money legislation to insulate this fund from political manoeuvrings and mismanagement.
“But from what I hear, the newly-proposed legislation is still going to keep a lot of the powers of the Minister of Finance and the Presidency. And, it is going to raise the ceiling on spending, which is okay, but you have to have a separation between politics and the money coming in. If not, it will be a recipe for disaster. That is extremely important and it is just one of the examples that come to mind,” the Co-Director explained.
Earlier this year, Deakin wrote on the NRF and the laws that govern same. He had indicated that the Act states that the Ministry of Finance (MoF), which is responsible for the overall management of the fund, would provide the Bank of Guyana (BoG) that is responsible for the operation of the fund, with an investment mandate pertaining to the funds. In developing the mandate, the Finance Ministry would receive advice from the Investment Committee, a group of experienced financial experts. But currently, that Committee does not exist, Deakin noted.
Similarly, he said, the Macroeconomic Committee, which is supposed to be responsible for analysing the future implications of public spending on the country’s economic competitiveness is supposed to advise the maximum amount that should be withdrawn from the fund each year. This Committee, Deakin wrote, in addition to the Public Oversight and Accountability Committee, is also missing.
He had further explained that the NRF Act also fell short in depoliticising the management of the fund. As it stands, he pointed out that the Ministry of Finance has too much control over the governance and spending of the resources. The members of the ever-so-important Investment Committee are all appointed directly by the ministry. The Minister of Finance, in conjunction with Parliament, also has a final say on how the monies are spent.”
Without a more independent oversight structure, Deakin warned that the fund will be more susceptible to “political cronyism”.
Industry experts have also pointed out that the fund lacks a medium-term expenditure framework and a clearer fiscal rule, which would allow for better planning and prioritisation of its incoming resources. At the moment, the fiscal rule which will be used to determine how much money is spent each year from the fund has been heavily criticised for being too complex for laymen to properly supervise.
The analyst has also relayed that the current rule also fails to curb debt-financed spending used to address short-term needs. Additionally, he said, the Act did not create a broader fiscal framework that defined rules for public debt, balanced budgets and revenues.
Taking the foregoing factors into consideration, Deakin stressed that Guyana’s oil funds are more susceptible to abuse by its politicians if the necessary systems are not in place.
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