May 21, 2022 News
… Govt.’s current approach not in keeping with best practice
Kaieteur News – The PPP/C Government has since transferred over $40B in oil earnings from the Natural Resource Fund to the Consolidated Fund so that it can support several projects outlined in the 2022 budget. As a result of the oil money being lumped with revenues from other sectors, there is no way of tracing which projects it is going to.
International Energy Analyst, Arthur Deakin is of the belief that such an approach is not in keeping with best practices. He believes Guyanese ought to know exactly what projects their oil money is being spent on in the interest of transparency and accountability.
This observation was noted by the Co-Director of the Energy Programme at Americas Market Intelligence (AMI) when he appeared on the Kaieteur Radio’s show Guyana’s Oil and You on Thursday evening. The analyst, who has vast insight into the energy sector, particularly in the Americas, advised that Guyana should consider increased oversight mechanisms so that it safeguards all opportunities for proper development through its oil wealth.
Deakin said that based on the information relating to the NRF, there appears to be no mechanism defining the spending from the NRF by line item. As such, the country may know what amount is being transferred from the NRF but has no information on exactly how those sums are spent and who would have received same. The analyst highlighted that this mechanism of spending is “concerning and should not be the case” when it comes to spending money from Sovereign wealth for Natural Resource Funds. Deakin noted that this trend is not unique to Guyana but is seen happening across different countries for example in the Middle East and other oil producing States where there are shell companies for instance, that allow for discretion in the way monies are spent.
“But this is concerning,” Deakin reiterated. “If it goes through a consolidated budget it should be clearly defined what those funds are going towards and what they are being used for. If not, it opens room for discretionary spending that there is just no way to know where that money is going.” Additionally, “I still haven’t seen any type of programme or structure looking at the amount that is spent from the NRF detailed line by line. It is known what is going to be spent this year, “but we don’t know exactly where those funds are going and who is getting those funds.” When it comes to transparency, “… this is extremely important for the society to ask for,” Deakin submitted.
The energy analyst also noted a couple of avenues that citizens could use to further hold their government responsible when it comes to the spending of their oil sums. He said citizens must use the electoral process to keep their leaders in line. Deakin said going out to vote and holding politicians accountable via presidential elections as well as municipal and regional elections is critical. “That’s the best way to hold your politicians accountable and responsible for their actions and words.”
Furthermore, Deakin reiterated the need for a “third party task force or team” to observe the movement of oil sums and ensure that it is being spent accordingly. This team, Deakin suggested, could be made up of the private sector, some government officials and other relevant stakeholders, “whose sole responsibility is to make sure that the NRF is being spent transparently and the funds are held accountable.” Until there is something like that, Deakin opined that Guyana will still lack the transparency that is needed. Currently, the NRF has an accountability team but it is made up of mostly government selected persons either directly or indirectly. “So, that’s going against the purpose of accountability,” Deakin pointed out. He said those are important things that civil society can demand in moving forward.
Senior Minister with responsibility for Finance, Ashni Singh, announced last week that the government made its first withdrawal from the NRF to the tune of US$200M or G$41.7 billion. As part of the Budget 2022 process, parliamentary approval was also granted for a total of more than US$600 million, almost the total amount currently in the Fund, to be transferred to the Consolidated Fund during the fiscal year 2022. The sums, it was noted, will be used to complement the financing of several budgetary projects of an infrastructural nature among others.
In Guyana’s budgetary process, spending is examined by line item and these would receive approval. However, the bulking of the oil related monies in the budget would not allow for the specific identification or tracking of the oil money. As such, there is no separation of oil funds from other revenue sources that make up the budget. This year’s budgeted sum totals a massive $553B.
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