NY Reserve Bank To Hold Guyana Oil Revenues

(Stabroek News, 7.Dec.2019) — Guyana’s Natural Resource Fund (NRF), which will hold oil revenues, is to be located in the Federal Reserve Bank of New York rather than the Central Bank of Guyana, Minister of Finance Winston Jordan has revealed.

“We are in the process of getting the requirement to have the account established,” Jordan stated during an interview with the Department of Public Information (DPI) on Wednesday before adding that once “parked” in the account, these funds will await a new Parliament to decide on spending. 

Jordan had previously indicated that the account would be a regular account at the Bank of Guyana and when royalties go into it, spending will happen until after elections when required committees are set up.

Stabroek News reached out to the Ministry of Finance for an explanation of the discrepancy in the two statements and was informed that in keeping with the provision of the Natural Resource Fund Act, the funds are to be “held outside of Guyana” but managed by the Bank of Guyana.

The Act, passed in January of this year, seeks to provide for the establishment of a Public Accountability and Oversight Committee, which shall be responsible for the monitoring and evaluating of the compliance of the Government and other relevant persons with the provisions of this Act; monitoring and evaluating whether the Fund has been managed in accordance with the principles of transparency, good governance and international best practices, including the Santiago Principles, as well as providing independent assessment of the management of the Fund and utilisation of withdrawals from the Fund.

Part IV of the Act assigns the Fund to the care and operation of the Bank of Guyana and places the general responsibility to manage the Fund with the Minister of Finance. The bill also seeks to establish an Investment Committee to advise the Minister on investment options and a Macroeconomic Committee to recommend, for the Minister, what amounts can be safely withdrawn from the Fund yearly while Part VII mandates that the Government seeks Parliamentary approval for withdrawals from the Fund.

Under the Act, the Auditor General is also required to perform an external audit, the report of which shall be submitted to the Minister along with the report of the internal audit.

Last month, Jordan announced that the NRF would soon be established, although it did not have required committees for governing and spending.

“We are excited that the oil is close. As a matter of fact, I am about  to establish the national resource  account to receive the royalties that we should get starting next month as long as the oil comes through,” he had said

Asked at the time about private sector participation, the Minister explained that he could not wait on it.

“We are not waiting to hear from them, we have already invited them. As you can see, the world is still turning and we have to cater for our portion of the royalty and then profits, to make sure that we get that and safely keep it in the account, until it is ready to be activated,” he said adding that “Post-election, we will be able to establish the committees and so on, and then they will take charge of the money and so.”

Profit share monies, he explained, would not be had until after the first year.

“As I imagine, we will get that at the end of a first year. Remember, it is a profit share, so after the accounts are audited and so on,” he stressed.

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