The Board of Directors for Guyana’s Natural Resource Fund (NRF) has issued its first mandate for the account, ordering that the funds remain put, as outlined in Central Bank’s 2023 first-quarter report.
During the quarter, the report states that a formal Investment Mandate was established for the fund following discussions between the Board of Directors and the Bank of Guyana. It was mandated that the funds be maintained in the deposit account held at the Federal Reserve Bank of New York, earning overnight deposit interest at the prevailing federal funds rate.
It was also agreed that Bank of Guyana will continue to monitor overnight interest rates and inform the NRF Chairman Major General (ret’d) Joseph Singh, MSS of any changes to consider adopting a ladder approach investment strategy.
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In providing brief clarity, Central Bank Governor, Dr. Gobind Ganga told OilNOW that the decision was taken to have the funds remain in the account, “especially when one considers the high-interest rate we are getting.”
“There is nowhere else you would get that,” he added.
According to the bank’s report, During the first quarter of the year, the US Federal Reserve increased its federal funds’ interest rate from a range of 4.25%-4.5% to 4.5%-4.75% and then to 4.75%-5%; an overall 50 basis points (bps) increase.
As a result of these increases, and a higher account balance, the fund continued to earn a higher level of interest income on its overnight deposits than in previous quarters. The report states that the fund earned GY$3.3 billion (US$15.66 million) in interest income over the quarter compared to GY$2.3 billion (US$11.30 million) in the previous quarter.
“Another increase is expected in May,” Dr. Ganga said, adding that it is therefore sensible for the funds to remain put.
