Guyana’s O&G earnings to be invested in “safe and liquid assets”- Finance Minister

A portion of revenues from Guyana’s oil and gas industry, once placed in the imminent Natural Resource Fund (NRF) will be “invested in safe and liquid assets,” the country’s government proposes. 

Among the investment plans touted by the country’s Finance Minister Winston Jordan, is that of foreign investments.  He made this announcement in outlining the proposed plans for managing oil revenues to the country’s National Assembly when he unveiled the Green Paper on the Natural Resource Fund on Wednesday, August 8, 2018.

“Given the uncertainty surrounding the future of fossil fuels, it is necessary for savings to begin from day one of production. To achieve this function, revenues will be invested in diversifying portfolio comprising of financial assets external to the domestic economy with long domestic horizons and high expected returns,” he stated.

Minister Jordan went on to say that “when we do invest, we must ensure that these investments are catalytic and promote economic diversification  so that we realize an economy that is strong and resilient…that can stand on its own long after oil has been depleted.”

This was emphasized in the Green Paper which stated that “it is strongly advised that financial market investments, utilizing the fund’s principal, should be diversified and held externally.”

“The Fund, in order to become sustainable and achieve all of its objectives, must also invest in overseas financial instruments,” the document stated, adding that the excess after transfers are made to the National Budget “would be invested in overseas markets in order to minimize the risk of creating economic instability locally.” 

This is to ensure that the country has a long-term stable source of income which would allow for the Fund “to meet its stabilization and intergenerational savings objectives.” 

According to the proposal by the Finance Ministry, “Very Safe Investments would be mandatory such that the first US$500 million and at least three times the expected annual withdrawal would be invested in Very Safe Investments –Eligible Bank Deposits and Eligible Treasury Bills.  This would ensure that the Fund meets short-term stabilization and cash management objectives.”