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Jordan’s position as “spender and saver” questioned

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first_imgSovereign Wealth FundChartered Accountant Christopher Ram has raised concerns over Finance Minister Winston Jordan’s position as a spender and saver of Guyana’s wealth. He noted that under the previous administration, the very matter would have drawn the attention of the then serving Opposition.Ram raised his concerns at an Energy Forum held last week at Duke Lodge. He said, “I wonder whether they (the Government) would have liked the same mechanism that they are setting out here if another Government — let’s not call the name of that other Government — if another Government was in place? Would we want a situation where a minister who is responsible for spending is also the minister responsible for saving and generating revenue and protecting those revenues?”The accountant said he is confident the administration would have rebutted this, thus he questioned the Government’s recommendation to have Jordan spearhead the Sovereign Wealth Fund (SWF).In a subsequent interview with this publication on Monday, Ram sought to point out the need for transparency in handling of the Sovereign Wealth Fund. He recommended the SWF be entirely isolated from the “spending ministry,” as it could have an impact on everyone.Ram also pointed to the need for an article to be “entrenched” in the Constitution so that no one, including Ministers, would be able to unilaterally access funds in the SWF, as he described it as a generational fund for the future.Opposition Leader Bharrat Jagdeo had earlier this year made a similar comment on the issue at one of his weekly press conferences.“I have said before that there should be no ministerial involvement in the Petroleum Commission; that the remaining oil blocks should be subject to a competitive auction or kept for future generations; and that we should complete the work on the Local Content framework. There have been no substantive moves in any of these directions.   As I have said before, there is no clear management framework for the oil and gas sector,” Jagdeo had said.The Opposition Leader noted that on multiple occasions he has “urged that Government take cognisance of the Santiago Principles and a model similar to the principles on which the Norwegian model was developed. Establishment of a Sovereign Wealth Fund is only one element of a management framework for the oil and gas sector.Jagdeo has made it clear that, for various reasons, he disagrees with the Finance Minister being given control over the SWF. He zeroed in on Jordan’s silence on the signing bonus Government had received from the oil company.Meanwhile, the document sets out specific rules, including the Fiscal Rule, which caters for the development gaps that exist both in terms of human capital and physical infrastructure, and the need to accommodate development spending via the National Budget.To oversee these decisions, the Government has recommended the establishment of a Macroeconomic Committee which would consist of five members, including a representative of the Finance Minister.In terms of management of the SWF, a Sovereign Investment Committee would be responsible for advising the minister on the suitability of any investment being contemplated. A representative of the Finance Minister would also be on that committee.Further, the Green Paper states that the Bank of Guyana (BoG) will be the operational manager of the Fund. The Opposition Leader has already expressed deep concern about this proposal.Although the Government has catered for a representative from the Opposition to sit on the SWF committee, Jagdeo has already objected to this proposal, stating that politicians should not be included.A SWF is a state-owned investment fund that is made up of surpluses from official foreign currency operations, proceeds of privatisations, governmental transfer payments, fiscal surpluses and/or receipts resulting from resource exports.It has been articulated as an important mechanism for the oil and gas sector, and with ExxonMobil announcing that production would start in 2020, calls have been made by stakeholders and the political opposition for establishment of Guyana’s SWF to be swift.Guyana’s SWF Bill was drafted by the Commonwealth Secretariat with input from the Government, and was presented to the subject minister in December 2016.last_img read more