Guyanese will soon have an opportunity to scrutinize draft legislation being formulated for the establishment of a Sovereign Wealth Fund (SWF) that will play a major role in the management of significant revenues expected from oil production in the South American country, come 2020.
The country’s Minister of Finance, Winston Jordan, told business people gathered at a dinner hosted by the Guyana Manufacturing and Services Association (GMSA) on Thursday evening in Georgetown, that the draft SWF legislation has benefitted from extensive comments by a number of Guyana’s multilateral and bilateral partners.
An inter-ministerial technical team has also been formed to oversee the finalization of this draft, he said, which will then go to the Cabinet. “After that process is completed it will be made available to the public for wide consultations, before being introduced into Parliament,” the finance minister noted.
The development of Guyana’s offshore oil and gas industry was described as a turning point in Guyana’s economic history by Mr. Jordan, and “…one that has not been witnessed since King Sugar was introduced in the 16th Century. This is a responsibility that the government takes seriously and, in this regard, a number of initiatives either have been taken so far or are in the process of being taken…”
The design of both a fiscal regime and a fiscal sustainability framework to address the management of natural resources wealth, is ongoing he said, and “…development of a time-lined work-plan on what public and private sectors need to do to prepare for first oil and thereafter.”
Notwithstanding the imminent benefits to the country from oil and gas, the finance minister was quick to point out that diversifying the Guyana economy remains a top priority. “Let me categorically state that the diversification of our economy, with or without oil and gas, is our number one priority. We are passionate about this, having witnessed what has happened to many countries with large natural resources wealth, which squandered the opportunity to use those resources for economic diversification.”
He noted that the painful consequences of crises and adjustment cycles have been observed, whenever oil prices drop sharply or persistently, or when the resources are exhausted, as they do ultimately. “We have an opportunity to make Guyana a model country in terms of our responsible use of the oil and gas resources,” he said.
Balancing the amount Guyana saves for inter-generational security and stabilization, one the one hand, and investing in the expansion of the economy, on the other, are the core issues that will drive future discussions in this area, Mr. Jordan noted.