Commonwealth Secretariat defends advice on sovereign wealth fund green paper

Economic Adviser at the Oceans and Natural Resources Division of the Commonwealth Secretariat, Dr. Daniel Wilde (third from left) and officers from the Finance Ministry and the GRA, during a meeting on the SWF. 

In the face of criticisms of its role in the crafting of a Green Paper for a Sovereign Wealth Fund (SWF), the Commonwealth Secretariat has defended its actions saying they are based on and guided by international standards.

“The Commonwealth Secretariat’s advice is anchored in the principles of the Commonwealth Charter which advocates that sustainable management of the natural environment is a key to human development,” Commonwealth Representative Neil Ford,  who is the organisation’s Spokesperson and Director of Communications, told Stabroek News. 

Further, he added, “The Secretariat’s advice is also guided by international standards including the International Forum of Sovereign Wealth Funds’ Santiago Principles.”

Dr. Jan Mangal

Following the release of the Green Paper on the Sovereign Wealth Fund and this newspaper’s report that ministerial powers had been cut in the revised Petroleum Commission Bill (PCB), former Petroleum Advisor to President David Granger, Dr. Jan Mangal issued searing criticisms of the Commonwealth Secretariat, the World Bank and Chatham House, an independent policy institute, for their initial roles in helping to craft the two documents.

Minister of Finance, Winston Jordan had stated that it was the Commonwealth Secretariat’s Dr. Daniel Wilde who helped his ministry in the crafting of the Green Paper on the SWF.

But Mangal said that from analysis and the growing public concerns that the Green Paper gives too much power to the Ministry of Finance, it is setting up the Natural Resources Fund Bill, which is expected to be laid later this year in Parliament, for a similar fate as the PCB which had to be sent back to be reworked for the broad authority it gave to the minister and creating room for politicization.

Dr Valerie Marcel

“Did those in charge not learn from the Petroleum Commission Bill? We seem to be trying our best to repeat the same mistakes now with the SWF, with respect to politicizing the oversight of the SWF by placing too much power with a Minister,” Mangal said following the laying of the Green Paper in the National Assembly, earlier this month.

“The Commonwealth Secretariat, who drafted the SWF, seems uninterested in bringing best practices that help the people of Guyana. I say this because they drafted the completely unacceptable Petroleum Commission Bill, and now this SWF. And the World Bank, they seemed content with the lack of progress over the last three years. I do not trust these two institutions to help the poor people of Guyana. Guyanese, seems like we are between a rock and a hard place. If the other guys were in charge, this oil stuff would already be a train wreck, but the current guys are steering in the wrong direction. We need to find a real new alternative as time is running out,” Mangal added.

The Green Paper lays out fiscal rules for the management of the SWF but with the Ministry of Finance as the overall manager and its minister having a key role in composing the macroeconomic committee which would be responsible for determining how those funds are apportioned.

“The Macroeconomic Committee would determine the Economically Sustainable Amount and would consist of …five members appointed by the Minister of Finance,” the document stated. It pointed out that a representative of the Minister of Finance will be the Chairperson and one of the members, a leading expert in macroeconomics, shall also be appointed by the Minister with the approval of Cabinet. Also among the five members would be a representative of the Bank of Guyana to be nominated by the governor.  Critics would likely see this candidate as a third nominee of the government.  The other two persons would be a member from academia or the private sector nominated by the Opposition Leader and a member from academia or the private sector nominated by the Institute of Chartered Accountants of Guyana.

The Green Paper also noted that, “the Ministry would be responsible for overall management of the (SWF), including requested withdrawal in the Annual Budget Proposal; calculating the Fiscally Sustainable Amount; drafting the Investment Mandate; entering into the Operational Agreement with the Bank of Guyana and drafting the Annual Report and reporting on the (SWF) through the Annual Budget.”

Other experts have also warned against politicians having charge of the SWF.

‘Direct Intervention’

And when this newspaper reported that the revised Petroleum Commission Bill has several changes,  key among them being that ministerial powers had been reduced, Mangal said that neither the Commonwealth nor Chatham House should accept any praise for this.

He said that had it not been for the direct intervention of President David Granger, the Bill would not have been sent for review and no changes would have been made. He said that he had queried with both groups the very concerns later raised by the Opposition and other stakeholders about the first bill.

“This is welcome news, but we have to get the latest bill reviewed by those who identified all the flaws with the first version (i.e. reviewed by the same expert at the Inter-American Development Bank…) The only reason the first bill was stopped and revisited was because of the President of Guyana, and not because of any of the Ministers, nor because of Chatham House nor the Commonwealth Secretariat,” he said.

“So why is Dr Valerie Marcel of Chatham House suddenly interested in pushing best practices? Why did Chatham House not object over the last three years when they were working closely with the Ministry of NR (Natural Resources)? They did nothing before because they are not interested in helping the people of Guyana, and seem only interested in being SEEN to be involved in Guyana. And the same applies to the Commonwealth Secretariat (Dr Daniel Wilde). The Comm Sec drafted the actual Bill itself. They just went alone with the Ministry, never mind the Bill was a major danger to Guyana’s future. Now the tides are turning they are jumping ship. Shameful,” he added.

According to Mangal, he had “challenged both of these agencies (and people) in 2017 because of what they were doing, but they just shrugged their shoulders.”

And while he believes that this country needs help from international organizations and personnel as the requisite skills and expertise cannot be found here, that help has to come from credible sources.

“Guyana needs help from international agencies with principles and integrity, not from consultants just looking for the latest gig in the country in vogue,” Mangal said.

No endorsement

Mangal’s reference to Marcel had come as a result of her views about the need for an independent Petroleum Commission and which views were reported in the August 5th Sunday Stabroek.

Responding to Mangal’s comments about her and Chatham House, Marcel told Stabroek News  that the public must first understand how her organization operates and know that they do not endorse policies or bills. However, she made clear that she does not intend to have a running exchange with Mangal as she in no way wants a “tit for tat”.

She explained, “I think it’s useful for me to explain how the New Producers Group works, since it’s been in the news and the public might want to understand our model: The New Producers Group is a knowledge sharing network for new and emerging producers that aims to improve government and public understanding of the petroleum sector and its effective management. The Group operates through in-country seminars, training sessions and facilitating peer-to-peer interactions where governments at different stages of the development of their petroleum sector learn from each other.  The Group does not endorse specific policies or bills.”

And on Mangal’s assertion on her jumping ship and wanting to be seen to be in Guyana she had this to say: “Guyana has been a member of Group since it started in 2012. We support many other countries without discoveries. That is the model of this group: countries developing their laws and institutions in the exploration stage learn from those just ahead of them and those with discoveries learn from the countries in the early production phase. We are not aligned with any political group or commercial interests and want to see the best development and governance outcome possible for the people of Guyana.”

Further, she posited, “Personally, my own expertise is national oil companies and petroleum sector governance. That’s really about how the various institutions with responsibility for the petroleum sector get established and interact. My recent public comments about the institutional set up in Guyana are consistent with my long-standing recommendations on how to establish a Petroleum Commission. It is a research question I have tackled in many emerging producer countries: How can emerging producers establish a capable body to oversee the oil companies?”

The Commonwealth Secretariat said that it has been supporting the “Government of the Cooperative Republic of Guyana since 2012 to draft the legal and regulatory framework for oil and gas development” and maintains that their actions are correct.

 “The Commonwealth Secretariat remains committed to supporting the Cooperative Republic of Guyana to ensure the effective regulation of the petroleum industry and that oil revenues are inclusively and sustainably managed for the benefit of current and future generations of Guyanese. In this regard, the Secretariat commends and encourages related discussions in Guyana’s National Assembly and its wider civil society,” it added.

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