Natural Resource Fund Bill
On January 3rd – just hours after the Speaker of the National Assembly, Dr Barton Scotland had declined to revisit the December 21, 2018 motion of no-confidence that resulted in the defeat of the APNU+AFC government, the Natural Resource Fund (NRF) Bill 2018 was passed after being presented for second and third reading by the Minister of Finance Winston Jordan.
The decision to proceed with the passage of the bill in the absence of the opposition which had declared that the sitting was unconstitutional was unfortunate. This bill once ratified by President Granger would establish the Fund intended to manage the country’s natural resource wealth – particularly the proceeds from first oil in 2020. Given its importance, it was imperative that the bill reflected bipartisanship and be sent to a select committee of Parliament. While the government has been criticised for its sloth on legislation and other preparations for the oil and gas sector, the NRF bill moved fairly swiftly from its origins in the Green Paper which was published by the government on August 8 and there certainly should have been room for discussing with the opposition the way ahead on this bill to ensure the broadest possible agreement.
According to its explanatory memorandum, the Bill that was passed seeks to provide for the establishment of a Public Accountability and Oversight Committee which shall be responsible for among other things:
(1) monitoring and evaluating the compliance of the Government and other relevant persons with the provisions of this Act;
(2) monitoring and evaluating whether the Fund has been managed in accordance with the principles of transparency, good governance and international best practices including the Santiago Principles;
(3) providing independent assessment of the management of the Fund and utilisation of withdrawals from the Fund.
Part IV of the Bill assigns the Fund to the care and operation of the Bank of Guyana and places the general responsibility to manage the Fund with the Minister of Finance. The bill also seeks to establish an Investment Committee to advise the Minister on investment options and a Macroeconomic Committee to recommend, for the Minister, what amounts can be safely withdrawn from the Fund yearly.
Part V of the Bill delineates what revenues shall be deposited into the Fund and the conditions for withdrawals from the Fund and what can be charged directly to the Fund.
Part VI addresses the relevant calculations needed for ensuring that the Fund achieves its purposes and also seeks to cater for emergency financing in times of major natural disasters.
Part VII of the Bill mandates that the Government seeks Parliamentary approval for withdrawals from the Fund.
Under the bill, the Auditor General is also required to perform an external audit, the report of which shall be submitted to the Minister along with the report of the internal audit.
In an editorial on August 13 last year, Stabroek News had criticised the Green Paper which had preceded the NRF Bill. The major concerns raised then have not been addressed in this bill which remains unsatisfactory. In the bill, the Ministry of Finance looms large in the arrangements for the NRF and its various committees and supporting infrastructure. The editorial of August 13 said as follows: “The deep political and ethnic polarisation that Guyana has been steeped for its post-Independence history, the lack of trust in governments, the undermining of independent minds and institutions by the political directorate, the pall of mismanagement and corruption that has characterised government, the risk of party paramountcy and the tendency for pork barrel spending all make the Ministry of Finance of this or any other government unsuited to the task of overall management of the NRF”.
These sentiments remain and have been heightened in the aftermath of the December 21st motion of no confidence which has deepened divisions around all matters. In this insalubrious environment, the NRF bill has been passed and will not have the confidence of both sides of the political divide.
While in other jurisdictions, where institutions and political maturity are well established, it is perfectly reasonable for the Finance Ministry and the Central Bank to have these significant roles, in the Guyana of today, this is not the case. Both the Ministry of Finance and the Central Bank are prone to political interference and machinations.
This grave defect will not be mitigated at all by the major addition in the NRF bill when compared to the Green Paper – the provision for a Public Accountability and Oversight Committee which was referred to earlier in this piece. This committee, according to the bill, is to comprise twenty-two members nominated by various groups and appointed by the President. The nominees will come from a “consortium of civil-society organisations and community-based organisations”, whoever those may be, and from a range of organisations including the Bar Associations, the Guyana Consumer’s Association, the Guyana Press Association, the trade unions and the 10 regional democratic councils. This kaleidoscopic attempt at oversight would be tokenism and shambolic. Very few of these nominees would be able to discharge the important function assigned to them. The whole objective of this committee is to apparently give cover to the government. Oversight of the NRF is an exceedingly serious responsibility and well-recognised experts in this area – from here and abroad – and perhaps even from the trillionaire Norwegian Sovereign Wealth Fund and other such successful enterprises should be enlisted for this assignment.
The government should be given credit for beginning to devise legislation in preparation for first oil. While the NRF Bill is eminently sensible in parts, it suffers as a result of the great political division in the country, the risk of political interference and dominance of proceedings and the inclusion of sinecures like the Public Accountability and Oversight Committee. Significant changes need to be made to the bill before it can be considered as acceptable.