In the fullness of time the significance of last Monday’s meeting between President David Granger and the President of the Inter-American Development Bank, Luis Alberto Moreno, could go way beyond the time that the two spent together at State House and the relatively brief summary of the engagement released immediately thereafter.
The content of the release circulated after the meeting appeared to revolve around the discourse on progress towards the creation of a Sovereign Wealth Fund (SWF) and it was on this issue that Mr. Moreno made his most profound pronouncements.
A SWF is a pool of foreign currency reserves owned by countries that have a trade surplus. They take in hard foreign currencies, primarily U.S. dollars, in exchange for their exports. The funds are then invested to produce the highest returns possible and also for direct expenditure on national development projects. Oil-rich countries commonly possess SWFs, the receivables from which are derived from their petro dollar earnings.
In the instance of Guyana one assumes that any SWF will, properly defined, take the form of a Strategic Development Sovereign Wealth Fund (SDSWF) with allocations from the Fund channelled into financing national projects that have a bearing on the country’s development goals including enhancing the quality of life for its citizens and investing in infrastructure for common use.
It is against the backdrop of the IDB’s historic role in exercising a measure of scrutiny over the wisdom and prudence with which funding associated with national development projects in developing countries is concerned, that the Bank is now paying an interest in Guyana’s progress towards the creation of a SWF infrastructure. The Bank has been helping to finance the setting up of the Fund and it would, understandably, be concerned that its investment contributes to the realisation of a robust SWF regime.
That, indeed, is the perspective from which last Monday’s discourse between President Granger and the IDB president should be seen. The reality is that a poorly thought-through and consequently structurally unsound SWF infrastructure can collapse either for the reason of its inherent structural weaknesses or else on account of its vulnerability to official plunder. Of course, official plunder can also be linked to substantive structural weakness.
What, perhaps, was most significant about Mr. Moreno’s remarks (quoted extensively in an official media release) was his singling out of President Granger’s leadership in what he described as “things that are so timely…like your Sovereign Wealth Fund.” Here, the IDB President is not only pronouncing on one of the Bank’s principal areas of interest – that is, the wisdom with which Guyana’s oil resources are managed which includes, as far as possible, ring-fencing the resources derived from the oil and gas sector from official plunder, but also, sending a pointed message that the Bank, up until now, is satisfied with the direction in which the administration is going in its quest to realise a solid Sovereign Investment Fund.
Rather than seek to assess the IDB President’s Report Card any further, it is perhaps best to have his words speak for themselves: “I think,” he says, “when people write the history of Guyana some years from now, they will look at this period in time and see how the Guyanese people and the Guyanese leadership thought about how they can deal with one of those things that can only happen in once in a lifetime. It is in this regard that we have been privileged to work with you President Granger, as you prepare things that are so timely like your Sovereign Wealth Fund and as you continue to push forward. Your leadership in this has been very central and we are very happy to be side to side with you.” This is hardly the sort of accolade that the President of the IDB is likely to bestow before affording the sentiment considerable and carefully measured contemplation.