News

Guyana: No splurging of oil $$$

Jordan says full US$300M to be deposited into wealth fund
…sees big improvements in social, economic conditions

EVEN in approximating that Guyana will receive around US$300M in the first year of oil production, Minister of Finance Winston Jordan clarified that at no time will this amount simply become the government’s splurging money.

On Wednesday at a press conference, Minister Jordan put forward the government’s official approximate figure, stating that the US$300M would come at 120,000 barrels of oil per day from Liza 1 alone.

However, he was quick to add that mechanisms will by then be in place to ensure that law and sound judgement safeguard the spending of the sharp increase in revenues. “It’s quite a sum [but] remember when this money comes, it goes into the Natural Resource Fund or our Sovereign Wealth Fund (SWF). So it’s not available to the government yet; some of it would become available based on the legislation which is passed and when that legislation is operationalized, then there are rules for withdrawal from the fund. So, at no time will US$300M be available for the government to spend,” Jordan explained.

He stated further that with the SWF being highly scrutinised and even criticised, legislation will be “tight” regarding withdrawals from the fund.

He then explained what Guyana’s fiscal position will be like with the arrangement as: “Let us say you had a fund that had in $300 and it had different rules and one of the rules said that the government can withdraw up to 50 per cent for economic development purposes. So 50 per cent, that $150 and that money will be withdrawn and put into your Consolidated Fund. Now that $150, remember , is in foreign currency, so that foreign currency will go to Bank of Guyana and that will increase the reserves of Bank of Guyana and the Bank of Guyana will then give us the equivalent in Guyana dollars and that will be deposited in the Consolidated Fund and now you do your spending.”

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