Govt. spent US$1.6B oil money to date

Jan 03, 2024 ExxonMobil, News, Oil & Gas

Kaieteur News – The Ministry of Finance on Monday disclosed that the final withdrawal from the Natural Resource Fund for the year 2023, amounting to US$152.1 million (G$31.6 billion), was made.

This takes the total transfers for the year 2023 to US$1.002 billion (G$208.9 billion) as approved in the National Assembly. According to the release, the withdrawal from the NRF on December 27, 2023, to the Consolidated Fund marks the eighth transfer since the fund was operationalised.

President Irfaan Ali assented to the legislation on December 30, 2021. The country’s first withdrawal from the oil account was announced the following year. In 2022, the Government of Guyana (GoG) plugged US$607.6 million in oil money into the National Budget for first time. This means that approximately US$1.6 billion in revenue from the industry to date has been spent.

Senior Minister in the Office of the President with responsibility for Finance, Dr. Ashni Singh

The most recent NRF receipts, published by the Bank of Guyana in September 2023 indicated that the country has received just over US$3 billion from the sector since production activities commenced in 2019. 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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Dr. Ashni Singh, National Assembly, Natural Resource Fund, President Irfaan Ali, Senior Minister in the Office of the President with Responsibility for Finance

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