The Ministry of Finance yesterday announced that the government had made its first transfer for the year from the Natural Resource Fund (NRF), a whopping $51.994b.
This withdrawal is being made under the controversial amendment which allows the government to extract a larger amount from the NRF than was permissible in 2023.
In a statement, the ministry said: “Pursuant to the Natural Resource Fund (NRF) Act 2021, as amended by the Fiscal Enactments (Amendment) Act 2024, Parliamentary approval has been granted for US$1,586,150,331 (equivalent to $329,885,563,088) to be withdrawn from the NRF in 2024.
“In accordance with this approval, the Government of Guyana has made its first transfer for 2024, totalling US$250 million (equivalent to G$51.994 billion) from the NRF on March 5, 2024, to the Consolidated Fund, within the total of US$1.586 billion (equivalent to G$329.9 billion) approved to be withdrawn in 2024”.
Finance Minister Dr Ashni Singh on January 15th this year disclosed plans for a revision of the NRF withdrawal rule and a hike in the domestic and external debt ceilings. Presenting his 2024 budget, he announced that US$1.15b in oil proceeds would be available for budget 2024 based on the formula that was in place at that time. The figure for the 2023 budget was US$1b. Under the amended formula, US$1.586b is available to the government this year.
Under the new extraction formula approved on February 2nd this year, the government is to draw down 100% of the first US$1b of deposits paid into the fund in the immediately preceding fiscal year.
According to the NRF legislation controversially passed on December 29, 2021, 100% of the first US$500m paid into the fund in the immediately preceding fiscal year could be withdrawn.
For every additional tranche, the government will increase the take. For the second US$1b paid into the fund in the immediately preceding fiscal year, the government is extracting 95%. The old legislation, by contrast, allowed the extraction of 75% of the second US$500m.
The amendment passed will enable 90% of the third US$1b of deposits into the fund in the immediately preceding year to be taken. The old law extracted only 50% of the third US$500m.
The new bill will take 85% of the fourth US$1b deposited compared to the old law which allowed the taking of only 25% of the fourth US$500m.
The new formula approved on February 2nd this year is clearly aiming at higher inflows when the fourth and fifth oil platforms become operational.
