Wednesday, November 30, 2022

Simpler withdrawal rules to be put in place for Guyana’s wealth fund – Finance Minister

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The Guyana government will table a Bill in the National Assembly today for the amendment of its Natural Resource Fund to provide simple rules to govern withdrawals. The government has said the current rules as too complex.

In criticising the Fund’s current configuration months ago, finance Minister Dr. Ashni Singh had referred to the assessment of the Inter-American Development Bank (IDB), which said the rules are too complex and that they depart from good practices.

In an interview on Wednesday, Dr. Singh said the elaborate mechanism used to determine transfers is a smokescreen.

“A very elaborate macro-economic committee is established. That macro-economic committee is expected to recommend an economically sustainable amount and then the finance minister determines a fiscally sustainable amount and then there is an elaborate formula that looks at the economically sustainable amount and the fiscally sustainable amount, looks at benchmark petroleum revenue and looks at production constraints, petroleum revenue – a very elaborate mechanism,” Dr. Singh said.

Every commenter on this Act has pointed out the issue of the complexity of its withdrawal rules, the finance minister related.

He said that when all these elaborate layers are peeled aside, what is left is a mechanism whereby the subject minister completely controls how much is being transferred from the Fund. The minister took issue with the fact that the “man in the street” would not be able to understand the elaborate mechanism used to determine withdrawals.

In its comments on the reform of the fund, the IDB said that state-of-the-art advice based on international experience and good fiscal management principles emphasize simplicity, flexibility and transparency.

Dr. Singh said the new formula will simply link the inflows into the Fund in one year, to the transfers to the country’s budget in the next year.

“I assure you it’s completely simple. Any layman can read it and understand what we’re saying,” he said.

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