Introduction
A number of readers have indicated to me I should have placed much more emphasis on the great extent to which the Permanent Income Hypothesis (PIH) fiscal rule for natural resources revenue management,no longer finds favour, even among its most ardent initial supporters. The International Monetary Fund (IMF) is a good example of this. I felt I had done enough through emphasising that this evaluation holds true, forcefully, for capital-scarce economies like Guyana. I suspect, though, readers feel strongly that with the negative and almost daily media onslaught on Guyana’s coming petroleum sector, there prevails a deep misunderstanding of the full implications of a Natural Resources Fund (NRF).
I remain convinced that, holding Guyana’s resources’ earnings in a Fund dedicated to invest these earnings externally, given all our pressing development needs, requires very careful calculation! Blind belief in the dogma that the only outcome would be theft by the political class is very naïve. The experience is private bankers and investors who have “agency” over similar funds have been exposed as no more “moral.” Malaysia today is an excellent example of Fund theft.