Is the lowly De­pen­dent’s Pen­sion Fund be­ing over­looked?

Stabroek News Sunday - - LETTERS -

From page 12

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.

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