Kaieteur News – The Ministry of Finance on Friday announced its fifth withdrawal from the Natural Resource Fund (NRF) for this year.
It said a furtherUS$50 million was withdrawn from the NRF in September, equivalent to G$10.4 billion, in accordance with the NRF Act of 2021.
Senior Finance Minister, Dr. Ashni Singh in the announcement said, “It would be recalled that in August and September, amounts totaling US$200 million, equivalent to G$41.6 billion had been transferred from the Natural Resource Fund to the Consolidated Fund to finance national development priorities and in February and May of this year, the Government made withdrawals amounting to US$400 million equivalent to G$83.2 billion.”
So far, US$650 million, equivalent to $135.2 billion was withdrawn from the oil account for the year.
Notably, as part of the budgetary process, Parliament approved a total of US$1.002 billion for transversal during the fiscal year 2023.
In the statement, the MoF said, “The PPP/C Government will continue to work aggressively through sound and transformative investments of oil resources from the NRF, utilising these resources in a clear and transparent manner, to the benefit of present and future generations.”
Despite this commitment to transparent use of revenue from the NRF, the government has been not defined what projects will be funded through this source. In fact, Auditor General, Deodat Sharma recently told Kaieteur News that the transfers to the Consolidated Fund from the NRF allows for the revenue streams to be mixed, thereby preventing proper accounting for the funds.
He explained, “What we are doing is the Bank of Guyana has the Natural Resource Fund (report to show) how much money is received…so once the money goes there and is gazetted, it goes into the consolidated fund. The government now has it as budget support so they don’t have it specifically to say well they are doing x school or x road- it’s just budget support- so that’s what we are auditing.”
The AG added, “We therefore can’t say well Bishops’ High School repairs were done by the oil money or St. Rose’s School was built by that money. We are unable to say that because they are not specific in the Budget.”
A key concern for Guyanese was transparency in the governance and use of the revenue that flows into the account from the oil and gas sector. Stakeholders were especially disturbed that the legislation features no penalties for misuse of the funds.
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 then begs the question as to how exactly the money generated from the nation’s natural resource is being put to use.
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 recently 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.
He reasoned, “It may work to Exxon’s benefit to put in new roads, it may be Exxon’s benefit to build a new gas plant but they don’t need that kind of electricity system in Guyana and who knows if they actually need the roads that are being built because there is no public process so what you have is a plan and the plan is to use the money to keep the existing political structure in power and that’s what is going to be done.”
Meanwhile, Director of Energy at Americas Market Intelligence, Arthur Deakin, during a recent panel discussion on Guyana’s oil wealth shared the view that government lacks a clear structure on how the resources from this sector will be used to transform the lives of Guyanese.
Deakin was asked to share his views on why Guyana still has high levels of poverty and why he was optimistic about the situation. In his response, the International Energy Analyst explained that the Government of Guyana has made “fruitful decisions” which led to investments from the ExxonMobil-led consortium in the Stabroek Block. He noted that Guyana’s oil sector has been moving at one of the fastest paces known in the industry; however when it comes to translating that wealth to the population, this has been taking some time. In fact, the specialist pointed out that for the wealth to benefit the population, it would require structural planning by the administration.
To this end, Deakin said, “The government lacks a clear vision, a clear plan on how it’s gonna spend the money it’s receiving from the oil revenue so I think there is a lot of room for improvement.”
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