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Government withdraws another $300 million from oil fund
Dr Ashni Singh, Senior Minister in Charge of Finance in the President’s Office
Kaieteur News – The Ministry of Finance announced late Wednesday that it was again withdrawing funding from the Natural Resources Fund (NRF).
In a statement, Guyana’s Ministry of Finance said that in accordance with the approval, the Government of Guyana made the third transfer for 2024 from the NRF to the Consolidated Fund on July 22, 2024, totaling US$300 million (equivalent to G$62.394 billion).
The ministry explained in a press release that the move was in compliance with the Natural Resources Fund (NRF) Act, 2021 (as amended by the Finance Decrees (Amendment) Act, 2024), when Parliament approved the withdrawal of US$1,586,150,331 (equivalent to Belize dollars 329,885,563,088) from the NRF in 2024.
According to the ministry, the transfer brings the cumulative withdrawals so far in 2024 to $850 million, equivalent to BD176.72 billion, while the total approved for 2024 is $1,586,150,331 (equivalent to BD329,885,563,088).
Earlier this year, reports emerged that the final withdrawal from the Natural Resources Fund for 2023 was $152.1 million (31.6 billion Canadian dollars). This brings the total transfers for 2023 to $1.002 billion (208.9 billion Canadian dollars), as approved by the National Assembly. The fund becomes operational in 2022.
The NRF Act sets specific guidelines for the use of these funds; however, to date, the government has not indicated that any projects have been funded using this revenue.
Section 16.2 of the NRF Act explains that “all funds drawn from the Fund shall be deposited into the Consolidated Fund and may be used only to finance: (a) national development priorities, including any initiatives to achieve an inclusive green economy, and (b) important projects directly related to mitigating the effects of major natural disasters.”
The government has not yet determined which “national development priorities” the oil revenues will be used for. This is particularly worrying because the legislation does not provide for penalties for misuse of the funds. The purpose of the Guyana Natural Resources Fund is to ensure that the country’s oil revenues are managed prudently and that fluctuations in natural resource revenues do not lead to fluctuations in public spending, thereby benefiting the people now and in the future. Due to the lack of transparency in the use of Guyana’s oil wealth, international financial analysts are concerned that these revenues may not be used to develop the country and improve the lives of poor citizens.
For example, Tom Sanzillo, director of financial analysis at the Institute for Energy Economics and Financial Analysis (IEEFA), noted that rather than prioritizing saving the money generated by the oil industry, as Norway has done, the government has embarked on a massive infrastructure and energy development program that is likely to benefit its partner ExxonMobil rather than the country’s citizens. Meanwhile, the Guyana government has previously said that money from the oil account is transferred directly to a consolidated fund that integrates various revenue sources. This means that the government cannot say which specific projects are funded by these revenues.
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