On the occasion of Suriname’s 49th Independence Anniversary on November 25th, its Presi-dent Chandrikapersad Santokhi announced an initiative that he described as Royalties for Everyone.
According to the Caribbean Media Corpora-tion (CMC), the President said: “Today, I announce the financial instrument, under the name Royalties for Everyone (RVI), which offers the people of Suriname a share in future oil royalties.
“The RVI instrument means that every Surinamese, who lives in our country, receives a savings note, worth US$750, with an annual interest of seven percent. The money will be paid out in the future, from the royalty income, of Block 58.” First oil from this block is expected in 2028.
Mr Santokhi said the payment would only be made when the oil from Block 58 has been sold and Suriname has received the royalties.
”The RVI is listed in US dollars so that it is stable in value. The payment will be made in Surinamese dollars. For people over 60 years old and people with disabilities, options are being developed to receive these before 2028.
“We must now translate that positive impact into opportunities for our own people. There are opportunities for our entrepreneurs, our youth to shape the future of Suriname with the right education and training,” Mr Santokhi said, according to CMC.
It was further pointed out that the Suriname Constitution stipulates that “natural resources are the property of the nation and will be used to promote economic, social and cultural development” and that “the State strives for a fair distribution of the national income, aimed at a fair distribution of welfare and prosperity among all levels of the population”.
Mr Santokhi said that after the announcement of the final investment decision for Block 58 he had received many requests to better implement the requirements of the constitution.
Some groups, he said, especially retirees had noted that unlike the younger generations they would not benefit from the positive effects of oil in the country.
“With these requests in mind, I … commissioned financial experts to propose a financial instrument that offers the people of Suriname a share in our natural resources.
“Today I can announce the creation of a financial instrument that offers the people of Suriname a share in future oil royalties. In this way, our people become de facto owners of Suriname’s natural assets.
“Consider this share as a form of reward for a number of years of necessary efforts during the macroeconomic and financial stabilization,” Mr Santokhi said.
The Suriname government added that the Royalties for Everyone has three objectives, namely that everyone has a share in the development of the oil and gas sector, just as other countries have done.
It said citizens are being rewarded for the years of necessary efforts during the macroeconomic and financial stabilization and thirdly that the instrument is a powerful incentive to achieve important and cross-party policy goals such as reducing the informal economy, by everyone freely identifying themselves with the tax authorities, and everyone who does not yet have one, getting a bank account.
Mr Santokhi said that several experts have been working for months under the coordination of the ministry of finance and planning, to develop this instrument, with the timeline that it will be implemented in the first half of 2025.
“I expressly inform you that the RVI will be paid from future royalties to be received by the State of Suriname.
“The State will not be burdened with a loan and future oil will not be pledged. The only thing that will happen is that part of the future royalty revenues will be allocated to the population,” Mr Santokhi added.
What will clearly now ensue in Paramaribo is a discussion about how this instrument might be tweaked, when exactly it should be implemented and the rules governing withdrawals etc. At the very least it is an early attempt by the government in Paramaribo to transparently and equitably distribute some of the resources that will flow into Suriname from 2028 following the historic deal signed with Total Energies for Block 58. It is also based on proposals by financial experts commissioned by President Santokhi.
Surveying the untidy handling of the cash handout announced by President Ali in October it is clear that he and his government could learn much from the way President Santokhi’s government has conducted itself in this matter. Fifty-two months after taking office, President Ali’s government is yet to present any comprehensive study on the allocation and distribution of the people’s monies accruing from the oil industry. Neither has the government commissioned financial experts or economists to advise on an appropriate programme.
Instead, Guyanese have been treated to one-party/presidential decisions on how Guyana’s oil money is to be spent. There is also a great deal of arbitrariness about how these decisions are being made when one considers how quickly President Ali shifted from $200,000 per household instantaneously to $100,000 per adult payable perhaps over a five-month period . Clearly there were no financial experts involved in his deliberations.
Instead of apprehending the grave responsibility it inherited following the discovery of oil here in 2015, the Ali administration has stormed pell-mell into massive expenditure on infrastructure without any structured attention to the basic needs of a large segment of the population which has been punishing under the daily burden of making ends meet as exemplified in the long-running cost of living series in Stabroek News.
Not only did the government fix its own formula for withdrawals from the Natural Resource Fund (NRF) – effectively emasculating its board – it amended the formula to take even more to sink into infrastructure and to borrow on top of that – a country with limited absorptive capacity and still significant unemployment and underemployment.
As has been stated before in these columns, the obligation of the Ali administration was to carefully consider how the revenues coming into the country from the massive oil resources should be apportioned broadly to four areas. First, inter-generational equity is pivotal as the non-renewable resource being extracted does not belong to this generation alone. Enough has to be salted away for future generations. This has not been the case. Second, a portion of the oil proceeds should be assigned to orienting the economy away from oil and gas towards services, light manufacturing, technological innovations and industrial scale agriculture. There is barely evidence of this. Third, there should be distributions to citizens in a fair manner through any of number of mechanisms such as tax relief and special consideration to relieving entrenched pockets of poverty. The remainder should be deposited into the Sovereign Wealth Fund with an appropriate provision for budgetary support, defence, emergencies, natural disasters and as a hedge against a precipitous decline in oil prices.
It’s a bit late in the day for this government to produce such a plan. The country is still also without a Petroleum Commission, a depletion policy and ironclad environmental safeguards. President Ali has shown himself to be keen on making decisions on his own or not at all. What really should be in the purview of Parliament has become the preserve of the presidency and that type of decision-making is unacceptable in this era. Each of the contestants at next year’s general elections should be required to produce a carefully crafted plan on how the people’s money from the oil and gas resources will be managed and utilized in a sensible manner.