Rising commodity prices in Guyana now worsened by fallout from the Russia-Ukraine war is seeing calls being made by the political opposition for government to tap into the Natural Resource Fund (NRF) and use a portion of the increased revenues to cushion the impacts to Guyanese.
But Vice President, Dr. Bharrat Jagdeo has cautioned that the government would not be engaging in such activities, lest it is accused of raiding the oil fund.
The economist and former President said it is true that the country would be getting more revenues given that the Liza Unity floating production storage and offloading (FPSO) vessel is now producing oil together with the Liza Destiny, and the oil prices have moved from the US$70 a barrel forecast to over US$100.
The Vice President said, “So we will probably get more money in the NRF, but we have right now not spent a cent of that oil money as yet…It is no comfort that more money will go and sit in a passive fund and people across the board are suffering. There is no comfort in that; we will earn a bit more than non-oil producers, but we will be utilizing those funds and going through a budgetary process until next year because the allocations this year have already been committed…”
OilNOW previously reported that Guyana’s 2022 budget would be utilising GY$126B from the NRF, which was its balance up to last year.
Dr. Jagdeo said that while the use of the revenue entering the account this year comes with a one-year lag, the government remains cognizant of the fact that the pass-through of increases on food and fuel is almost immediate to people.
“So, citizens feel almost an immediate pain but understand that your ability through NRF to intervene comes almost a year later because it is only through the new budgetary cycle that you will get more money,” the Vice President reiterated.
Asked to say if the 2022 earnings can be tapped on account of the current circumstances potentially amounting to an emergency and it being of an unprecedented nature, the Vice President agreed that the fund does allow for this but noted that the government is being cautious of the fallout from such an approach. He said too that the law is specific about the type of emergency the money can be used for.
“So yes, the Act allows for access for emergency purposes, but the naysayers will say we are raiding the fund and we don’t have a shortage of naysayers in this country,” expressed the VP.
The government has already said it is reviewing measures to soften the impact of the Russia-Ukraine crisis on food security and fuel prices in the South American country. This will see water and fuel prices being subsidized by the state to ensure Guyanese do not pay more for these vital commodities.
According to Guyana’s NRF Act 2021, all withdrawals from the Fund shall be deposited into the Consolidated Fund and shall only be used to finance national development priorities including any initiative aimed at realizing an inclusive green economy and essential projects that are directly related to ameliorating the effect of a major natural disaster.
