Dear Editor,
My letter to the editor, `The Coalition sought an NRF of the highest calibre,’ published in Stabroek News (SN, November 8, 2021), evoked an immediate and vituperative response from the Ministry of Finance, an organisation for which I have the fondest of memories, having spent the greater part of my working life there. The ad hominem attack on me, in the Ministry’s Press Statement released on the same date, was not unexpected; it is the typical response of a government that seeks to denigrate anyone who dares to criticise or hold alternative views to them. This reaction is, perhaps, the reason why many commentators have sought to remain silent or skirt around the burning issues of the day.
I have no intention of responding to the attacks; I do not wish to reduce myself to the mudslinging that characterises those who do not want to deal with the issues. I will remain with the cream – at the top, contributing to debates and discussions in a civil and respectful manner.
Most of my letter was devoted to the rising debt burden and the Natural Resource Fund (NRF) – very topical issues that have attracted the attention of at least three SN editorials, Kaieteur News, Dr Tarron Khemraj and Christopher Ram, among others. While these issues do not need to be rehashed here, there are two areas of the Press Statement (PS) that I wish to make brief comments on.
The PS indicates that the PPP/C government securitised the overdraft left by the Coalition government. When questioned by Annette Ferguson, Member of Parliament, about the state of the overdraft of the Consolidated Fund at August 2, 2020, the Senior Minister in the Office of the President with responsibility for Finance disclosed that it was $78.7 billion. This would have accumulated over the 5-year period of the Coalition government. By December 31, 2020, this overdraft had grown to $116.6 billion, an increase of $38.9 billion. So, in less than half of a year, the PPP/C government had ballooned the overdraft by nearly 50% of what accumulated in 5 years. In his Press Conference, Opposition Leader Joseph Harmon identified that the overdraft had increased even more, by April 2021, to $139 billion, more than three-quarters of the amount inherited at August 2, 2020. Yet, at page 18 of the 2021 Mid-Year Report, there appears this sentence, “In June 2021, government securitised the inherited overdraft at Bank of Guyana … totalling G$200 billion.” Discrepancy, maybe!
In the Press Statement, I am accused of making “brazen misrepresentations” because I gave the impression that the APNU+AFC government had crafted a “superlative” Natural Resource Fund. To buttress the misrepresentation claim, the Press Statement cites an Inter-American Development Bank recent publication that questions the withdrawal rule, because it is too complex and that its design departs from good practice. Our experience with putting together the NRF legislation was that every financial institution, non-governmental organization and individuals who provided comments on the draft legislation, had different opinions about what was good for Guyana. As a result, a spreadsheet of all the comments, criticisms and recommendations of the institutions and individuals was developed. These were thoroughly discussed and decisions made. This is unlike the dithering that is taking place with regards to Local Content legislation. There is no ‘perfect legislation’; this is why review and adjustments are made after a period of implementation. For your readers’ information, Guyana’s withdrawal rule is similar to that of other small petroleum producing countries such as Ghana and Timor Leste.
Just as was done in the Press State-ment, I cite a very relevant paragraph of the International Monetary Fund (IMF), June 2019, “Guyana: Staff Concluding Statement of the 2019 Article IV Mission”:
“The Mission welcomes the passage of the Natural Resource Fund (NRF) legislation for managing the country’s natural resources wealth; it underscores the authorities commitment to fiscal responsibility. To ensure fiscal responsibility is achieved, the mission recommends complementing the NRF legislation with a fiscal framework that constrains borrowing and achieves a balanced budget in the near to medium-term. To achieve this target, the annual non-oil deficit should not exceed the transfer from the NRF. This would ensure that excessive public expenditure will not lead to debt growing at the same time as the NRF accumulates. It is also necessary to preserve the spirit of the NRF framework … The pace of scaling-up public spending needs to be gradual to reduce bottlenecks from absorptive capacity constraints, avoid waste and minimize macroeconomic distortions related to ‘Dutch’ disease …” This is sage advice which the government can continue to ignore at the nation’s peril. Already, there is clear evidence of absorptive capacity issues and supply bottlenecks, among other constraints, impeding progress in implementing the public sector investment programme.
Sincerely
Winston Jordan
Former Minister of Finance
