US$1.16 billion in oil revenues expected to be plugged into Guyana’s 2024 budget

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Kemol King
Kemol King is a journalist with six years of experience in Guyana's media landscape. He covers the oil & gas sector and its impact on the country's development.

With an anticipated sum of US$1.629 billion from profit oil and royalties in 2023, the projection for the amount available for withdrawal and spending from Guyana’s Natural Resource Fund in 2024 stands at US$1.16 billion.

The formula, encapsulated in the withdrawal rule as stated in the first schedule of the National Resource Fund Act, sets a cap on the yearly withdrawals. It fundamentally ties the withdrawal in any given year to the fund’s inflows from the preceding year. This rule essentially prevents the spending of savings accrued from past years, allowing only the inflows from the prior year to be spent.

Fifth withdrawal this year from Guyana’s oil fund takes total to US$650 million  | OilNOW

The calculation is straightforward: 100% withdrawal is permitted on the first US$500 million, 75% on the second US$500 million, 50% on the third, 25% on the fourth, 5% on the fifth, and 3% on any amount surpassing US$2.5 billion. This methodological approach to managing the nation’s oil wealth was lauded by the International Monetary Fund for fostering transparency and public understanding.

Upon applying this formula to the anticipated US$1.629 billion in oil revenues for 2023, the sum available for withdrawal is approximately US$1.15725 billion. 

Breakdown:

100% of the first US$500 million = US$500 million

75% of the second US$500 million = US$375 million

50% of the third US$500 million = US$250 million

25% of the remaining US$129 million = US$32.25 million

This amount represents around 71% of the total expected revenues. The remaining 29% or US$471.75 million will be retained in the fund as savings. 

Ali expects US$10 billion in annual inflows to Guyana oil fund by 2030 | OilNOW

As the government expects the Fund to close 2023 with approximately US$1.977 billion, the 2024 withdrawal would leave approximately US$820 million as savings. 

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