Favouring the model used by Norway, Policy Forum Guyana (PFG) has recommended that all of Guyana’s revenue generated from its oil sector should be deposited in a Sovereign Wealth Fund for future generations, which it says is the only way to guarantee “intergenerational justice.”
The non-governmental organization adds that the present generation would have the right to any income generated from investments of the Fund, distributed as a “Citizens’ Dividend.”
Its recommendation comes in response to comments made by President Irfaan Ali and Vice President Bharrat Jagdeo at last week’s Diaspora Conference, where they spoke of government’s intention to re-structure the Natural Resources Fund Act (NRFA).
In a statement, PFG said it was heartened to hear Jagdeo indicate that “the fund must be managed in a professional manner distanced from political interference,” since the current Act, in his words, “did not offer enough distance for politicians from its management”.
PFG said while restricting political meddling in the affairs of public sector enterprises is important, it is crucial also to avoid creating an autonomous NRF structure completely insulated from parliamentary oversight. “With the volume of funds likely to be at its disposal, whoever controls the NRF will control the economy,” it further notes.
Norway, it added, was very keen to avoid this kind of separate entity with its political power and it solved the problem by the simple rule of taking away the oil money from the budget and forcing the government to raise revenue from taxation to fund the budget.
“The simplicity of the Norwegian model is better suited to Guyana. Money in the Fund is invested passively, requiring very low management and oversight skills and its operations are open to the scrutiny and transparency the ruling party appears anxious to secure. Norway, contrary to what was stated in the ‘diaspora’ call, does not have two funds, one handling stabilization issues and the other savings. It has one Fund responsible for both functions,” it explained.
While noting government’s inclination to use the fund to spend on current needs, PFG said these should be paid for by raising taxes, royalties, licenses and permits from those who benefit from the privilege of converting public assets into private wealth. “By contrast, Guyana exempts major beneficiaries in the gold, oil and extractive sectors from almost all taxes, providing duty-free privileges of every description to companies who have not the slightest interest in the future of Guyana’s children,” it said, while adding that politicians, occupationally allergic to raising taxes, prefer negotiating confidential agreements with foreign companies.
It further argued that as with inherited land or family jewels, future generations have a right to inherit as much as the current generation. “Intergenerational justice is a right, not an option. The only way to guarantee justice is for all the money earned from the sale of assets to be deposited in a Sovereign Wealth Fund, recognizing that this Fund belongs to the next generation,” it added.
PFG argued that all Guyanese, present and future, are robbed of their inheritance by squandering assets in scandalously low sales to extractive companies. It said this “global scandal is disguised and kept from public attention by the simple device of promoting oil ‘wealth’ as windfall’ revenue, rather than losses through the reckless sale of assets.”
Additionally, PFG argued that these important issues should not be disseminated indirectly to Guyanese citizens via Zoom calls to ‘the diaspora’. It said government has a constitutional obligation to protect the rights of future generations (Article 149 of the constitution) and citizens have a constitutional right to influence political decisions that affect them (Article 13). “This constitutional rights framework is the proper umbrella under which national policy decisions should be debated, resolved and implemented,” it added.
