Is the lowly Dependent’s Pension Fund being overlooked?

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Purpose and strategy

The key to a successful SWF then has to be the management of the investment and the purpose that it intends to serve. The purpose must be aligned with the investment strategy for the latter to work effectively. Other reasons for establishing a SWF are linked to the protection and stabilization of the budget and economy, including, diversifying economies from non-renewable commodity exports; assisting central banks use up unwanted liquidity; increasing savings for future generations or uncertain times; funding social and economic development; ensuring sustained long-term capital growth and earning greater returns than on foreign exchange reserves.

According to Minister Trotman, Guyana’s SWF Bill was drafted by the Commonwealth Secretariat with input from the Government of Guyana and follows the Santiago Principles, a set of generally accepted principles and practices that reflect SWFs’ investment practices and objectives. The Bill is patterned after that of Norway, which therefore suggests that Guyana’s SWF would be a savings fund. According to Minister Trotman, before oil revenues come on board in 2020, Guyana’s SWF will seek to set aside revenues from the other industries in the extractive sector like gold, timber, bauxite and other rare minerals that are mined, so that by 2020 experience and discipline with respect to the management of the fund will be gained.

SWF

The question becomes what will the government do to gain the experience that it is looking to acquire? It appears to this writer that the existing SWF known as the DPF would be a good place to start.

That fund is clearly in need of strengthening and that action could be taken now and the experience used to inform the next SWF.