The US$200 million (which equates to some $41.7 billion) from Guyana’s Natural Resource Fund (NRF) held in the Federal Reserve Bank of New York, was transferred on Wednesday to this country’s Central Bank and will be subsequently deposited into the Consolidated Fund for spending, this newspaper understands.
Government, though the Minister with responsibility for Finance, this week requested the Central Bank here to put in the request to its US counterpart to make the monies available for transfer, sources close to the process explained.
On Tuesday, Senior Minister in the Office of the President with responsibility for Finance, Dr Ashni Singh, announced that government had made its first drawdown from the NRF, in accordance with the Natural Resource Fund (NRF) Act 2021.
According to a release from the Ministry of Finance, the Minister said that pursuant to Section 16 of the NRF Act 2021, US$200 million, equivalent to $41.7 billion, has been transferred from the NRF to the Consolidated Fund to finance national development priorities.
The release noted that the transfer was made in accordance with the “strengthened legal architecture of the NRF Act 2021” and follows the publication in the Official Gazette of all petroleum revenues paid into the Natural Resource Fund during the period 1st January to 31st March, 2022.
It was explained to this newspaper that the Federal Reserve Bank of New York account into which the oil monies are paid will be kept, and for transactional purposes is named the NRF Account.
With the Bank of Guyana as the keepers of the account, being this country’s national bank, it is through that entity that withdrawals are made for its client, the government, and transferred to the Consolidated Fund.
However, there is no way to track specifically how NRF monies will spent as it will be pooled in the Consolidated Fund.
This was brought to the fore, prior to the passage of this year’s budget, when a motion was moved that the sum of $126.9 billion, equivalent to US$607.6 million, that had then been in the account, be withdrawn from the NRF for the financial year 2022, in keeping with the Natural Resource Fund Act of 2021.
“Be it… further resolved That this National Assembly approves the sum of $126,693,310,000 equivalent to US$607,606,570.98 to be withdrawn from the Natural Resource Fund for the Financial Year 2022 in accordance with the Natural Resource Fund Act,” the motion stated.
While the House was still in the Committee of Supply, the question had been asked by APNU+AFC Member of Parliament, Dr Karen Cummings, how the funds from the NRF will be used and what projects it would be directed to as there was no specific line item with that information.
In response, Dr Singh stated that the new NRF Act of 2021 establishes a mechanism whereby transfers from the NRF would go into the country’s Consolidated Fund and later used for the various initiatives or projects.
“The mechanism that is provided for in the NRF act is one whereby withdrawals are made from the Natural Resource Fund, transferred to the Consolidated Fund and then all forms part of the fungible pool of resources in the Consolidated Fund and then national development priorities are appropriated through the budgetary process,” the finance minister explained.
Shadow Minister of Finance, Juretha Fernandes, pointed out that throughout the consideration of estimates for other agencies, opposition MPs were told that the Minister of Finance should be asked about specific projects that will utilise funds from the NRF.
“Could the Honourable Minister actually say how this House will know what specific projects will be utilising the NRF fund and also how that money will be audited?” Fernandes asked.
The minister however reiterated that when the funds are deposited into the Consolidated Fund, the national development priorities are determined through the budgetary process of which he said the appropriation process is an integral part.
He explained, “The national budget is then subject to scrutiny during its implementation and execution and it is then subject to… auditing and importantly, scrutiny by the Public Accounts Committee process.”
Fernandes then responded that the opposition hoped that there would be a “transparent system” which would enable the committee to track specifically, the monies from the Natural Resource Fund and how it is being spent.
“This is the first time this fund is being utilised in a budget Sir, and the least we expect as members of the National Assembly, the least we expect is to be able to tell the people of this country that this is what the fund was used for!”
Despite the opposition’s discomfiture, however, the motion to have the US$607 million withdrawn from the fund was passed.
Observers have questioned how the first withdrawal could have been made since the board for the NRF has not yet been appointed. While the NRF Act says that the Board is responsible for “the overall management of the fund; reviewing and approving policies of the fund; monitoring the performance of the fund and ensuring compliance with the approved policies of the Fund; exercising general oversight of all aspects of the operations of the Fund; and ensuring the Fund is managed in compliance with” the Act and all other applicable laws, the motion covers government’s withdrawal. At the same time, the law does not state that approval for the first withdrawal has to come from the Board, a government source said.
