Even though the management of wealth funds is primarily a public sector responsibility, the United States Ambassador to Guyana Sarah-Ann Lynch says that their operation and success are heavily dependent on a proactive private sector participating in administration and oversight.
Lynch was at the time giving the feature address at the Guyana Manufacturing and Services Association (GMSA) annual luncheon at the Pegasus Hotel yesterday.
Lynch noted that one of her top priorities as Ambassador will be to promote responsible economic growth. With first oil expected early next year, she said the growth part will be easy, but as the country enters into another phase of economic development, the “responsible” part may be more difficult.
“Boom times don’t always result in the most responsible choices. I urge the GMSA to continue being proactive in ensuring that its members are at the forefront in participating in and benefiting from the economic growth, while defending their rights and interests of those [in] their communities,” she said.
She further noted that the discussion forum last year on the Sovereign Wealth Fund (SWF) particularly interested her and this, if implemented immediately and efficiently, should provide Guyana with the opportunity to invest in its long-term future as well as today’s infrastructure, health, education, security, and even the country’s agricultural needs.
“I must congratulate the people of Guyana for taking this important step before first oil production and before oil profits begin rolling next year,” she said, while noting that even though the first step is important, more hard work, and not just by the government, would be required to ensure the fund and Guyana both meet their full potential.
“The fund exists, but now must be implemented. Now, then, is the critical time to get this right. You, the private sector, have an important role to play in ensuring that the fund achieves its purpose to transform transient natural resources into stable and sustainable future income,” she explained. According to Lynch, studies have shown that the most effective SWFs are independent, transparent, inviolable and nonpartisan.
As it relates to the plan being independent, the Natural Resources Fund (NRF) law states that it will be overseen by independent committees comprised of persons who are not beholden to any interested entity. This, Lynch said, is important because no process can be considered truly independent if it is controlled by persons who stand to benefit inordinately from a particular outcome, whether financially, politically or in other ways.
The Public Accountability and Oversight Committee will have representation from private sector bodies, including the Bar Association of Guyana, the Guyana Press Association and the Private Sector Commission (PSC). “I know this chamber has a working relationship with the [PSC] and that the PSC has in place a Natural Resources Management Committee which looks at matters such as the NRF. I urge you to continue taking a leading role working with the PSC, as well as educating the populace to ensure the NRF is implemented in a way that can make all Guyanese proud,” she said.
Examining the second principle of transparency, Lynch noted that fiscal transparency refers to the publication of high quality information on how a government or an independent NRF receives, spends and manages a public resource.
“For instance, one of the provisions of the legislation provides that the minister may, through a competitive and open procurement process, hire an investment advisory services company to provide advice on fund investments. In all likelihood, this would be a private sector company. The GMSA and other private sector agencies can exercise due diligence to ensure that this advisory company is competent and reputable, and advise the government as it develops its shortlist of potential firms,” she explained, while noting that the private sector can constantly advocate for regular public disclosure of the investment objections of the NRF, its funding, withdrawals, and spending, as well as other pertinent information to help ensure that there is no misuse of the fund and that the country benefits holistically.
As it relates to the third principle of inviolability, Lynch said that the fund will play a very important role in the economy, and now that a framework is in place, it should remain in place for the foreseeable future. She said advocacy by the GMSA and sister private sector agencies must be directed at ensuring that the fund remains sacrosanct and also urged that discussions with legislators, policymakers, community leaders and persons across society as a whole, including everyone who may have different opinions on the fund and its implementation, be held, while the baseline framework is constant to ensure the fund achieves its purpose of bringing prosperity to Guyana well after the resources have been extracted.
“It is important to talk to more than just your friends. Political fortunes ebb and flow, but a sovereign wealth fund and its defence must be constant across all governments for decades to come, so that all those current and future governments remain accountable for staying true to the spirit of the fund and keeping it alive. This requires a constant, pervasive message regardless of who is in power at any given time,” Lynch said.
Lastly, Lynch highlighted the need for stability and accountability across the years and noted that this is why the principle of non-partisanship is so important. Lynch stressed that it is not about politics, but economics, and as representatives of the private sector, the GMSA and other stakeholders must do their part to ensure that the decisions the organisations make are impartial, objective, and free from political bias.
“In the end, what the GMSA and other private sector groups do to ensure the hallmarks of a successful [SWF] are instilled in the NRF boils down to this: embrace your role as an engaged stakeholder, lobby for expertise, information-sharing, and transparency, and broaden the exchange of ideas. You have a unique opportunity to advocate for government action with the goal of ensuring that the NRF is implemented properly from the start, before the profits from first oil begin, to ensure those profits benefit the Guyanese people well into the future,” she said, while noting that the benefits of doing so will go well beyond the natural resources sectors.
Head of the GMSA Clinton Williams also made brief remarks at the event and said that the balance of trade between Guyana and the United States of America will undergo a monumental shift in the coming months.
