Opposition questions purpose of NRF Investment Committee as Gov’t plans to withdraw 98% of earnings

Jul 15, 2024 News

---

Kaieteur News – Why pay an investment committee, if there are no funds to be invested? This is the conundrum the Opposition is faced with presently, as the Government of Guyana has effected changes to the rules of the Natural Resource Fund (NRF) – the country’s oil account – to allow for 98% of the earnings to be withdrawn this year.

The Investment Committee is essentially a board of seven members – including two specialists without voting powers. This Committee is tasked with advising the Board of Directors on the Investment Mandate, according to the NRF Act of 2021. Each member is remunerated “in respect of their office as the Minister (of Finance) may determine from time to time” according to the NRF Act.

The Investment Committee is chaired by Chartered Banker, Ms. Shaleeza Shaw. Other appointees include Executive Director of the Georgetown Chamber of Commerce and Industry (GCCI), Richard Rambarran, Attorney-at-Law, Michael Munroe, Mr. Lauris Hukumchand and more recently, Mr. Terrence Campbell (Opposition nominee and) and Mr. Ganesh Sugrim.

During the 83^rd Sitting of the 12^th Parliament last Monday at the Arthur Chung Conference Centre, Liliendaal, East Coast Demerara the 2023 Annual Report of the NRF was presented to the National Assembly by Minister with responsibility for Finance and the Public Service, Dr. Ashni Singh.

A key highlight of the document was the interest accumulated by the fund in 2023.

According to the document seen by this newspaper, “Net return generated by the Fund totaled G$18,105.25 million (US$86.84 million) for the year 2023, a substantial increase of 396% (G$14,455.17 / US$69.33 million) over the previous year’s level on account of higher interest rates on overnight deposits during 2023.”

The Natural Resource Fund account is held at the Federal Reserve Bank of New York.

During the Leader of the Opposition’s weekly press conference on Friday, spokesperson on oil and gas, Elson Low questioned the role of the NRF Investment Committee since he pointed out that the stage has been set for 98% of the earnings to be withdrawn by government, leaving a meagre sum for possible investments or savings.

He explained, “While we are seeing reports come out of the NRF, the real devil is in the details in a sense because we have a government which has of course changed the rules of the NRF (Act) so that a vast majority of resources – 98% of resources can be withdrawn.”

Low added, “That is alarming and it means that we are not going to have a substantial NRF for the next several years at least unless of course they come and change the rules again and make it even easier for them to access more funds.”

The economist observed that the Opposition’s nominee for the Investment Committee was only recently appointed by government, some one year after the candidate was proposed. To this end, Low said this “is to us an indication that they are fully well aware that they are going to use all the funds that are in the NRF and if you are going to use all the funds why have an investment committee in the first place?”

The economist was keen to note that the NRF accumulated US$86M in interest last year, a “substantial sum” which the Opposition believes could have been used to pay increases to public servants. Contrary to that however, Low said “we are going to see the plundering of the sovereign wealth fund… the government has been hesitant to speak at all about the interest because they intend to empty that sovereign wealth fund and if we are going to empty the sovereign wealth fund then you not gonna want to talk about the interest that is earned if you leave some of the money there.”

The new formula approved in February this year stipulates 100% withdrawal of the first US$1 billion received last year, 95% of the second US$1 billion, 90% of the third US$1 billion, 85% of the fourth US$1 billion, 50% of the fifth US$1 billion, and 10% of amounts over US$5 billion can be withdrawn.

According to the 2023 NRF Annual Report, the Fund up to the end of 2023 received deposits to the tune of US$1.9B, of which a total of US$1.6B was withdrawn.

According to the document, at the end of 2023, the Fund’s total deposits since the first oil payment on March 11, 2020, amounted to US$1,868,994,023.55. At the same time, it was reported that total withdrawals by the government totaled US$1,609,776,819 at the end of December 2023.

 

 

 

 

 

---

• investment committee, low, Mr. Lauris Hukumchand, NRF, Report, withdraw

---