By Kemol King
GEORGETOWN, Guyana, (DPI) – Of the US$607 million sitting in the New York Federal Reserve Bank, not a cent of Guyana’s oil money has been tied up in any deals. All of the programmes the government has so far implemented for the betterment of people’s lives, are a result of its prudent financial management of other funds.
It is against the law to encumber the monies deposited into the Natural Resource Fund.
Section 25 of Natural Resource Fund Act 2021 states that the financial assets of the Fund shall not be encumbered by any person or entity. This also applies to future petroleum revenues.
This means that the Fund’s assets cannot be used to provide credit to the government, or any person or entity. They cannot be used as collateral for debts, guarantees, commitments or other liabilities of any person or entity. Government also cannot borrow against the Fund or any of its assets.
The Act specifies that the government shall not borrow nor lend money from the Fund.
It shall not hold any financial instrument that places or may place a liability or contingent liability on the Fund.
If any contract, agreement or arrangement is entered into that encumbers the financial assets of the Fund or future petroleum revenues, the law would regard such arrangement as null and void.
The Act notes, for the avoidance of doubt, that this does not prohibit investing from the Fund into eligible derivatives. The Act outlines rules for the investment of the Fund’s assets. But even in this regard, none of the Fund’s assets have been expended.
Management of the Fund’s assets and oversight of its operations are to be handled by the governance mechanisms that government has put in place to manage the Fund away from direct political interference. These include the board of directors, the public accountability and oversight committee and the investment committee.
The Natural Resource Fund Act 2021 has several mandates which seek to ensure transparency in the management and use of the proceeds from the exploitation of Guyana’s petroleum resources.
