City chamber sees major problems in sovereign wealth fund paper

Deodat Indar

The Georgetown Chamber of Commerce  and Industry (GGCI) will be looking carefully at the Green Paper on the proposed Sovereign Wealth Fund (SWF)  as it has found a lot of “leakages from the start to end”, its President Deodat Indar says.

At a press conference on Wednesday, Indar raised concerns about several oil and gas issues including Local Content legislation, the Memorandum of Understanding that will be signed between the Government of Guyana and the Government of Trinidad and Tobago and the Green Paper that was revealed in Parliament last month.

“The Government has put out a Green Paper [and] this Chamber of Commerce, on October 5, will be hosting an energy forum to discuss this among other things in energy,” he said, while noting that he has personally looked through the Green Paper and the Petroleum Committee of the GCCI will relay the Chamber’s official position on it soon.

However, from his initial review of the document, he has concluded that there is a lot of work that has to be done on it.

“I see a lot of big institutions have lent their voice to this; the IMF [International Monetary Fund], Commonwealth and the World Bank… But we are going to look at it because right now from the start to end it has a lot of leakages,” he asserted, while highlighting that there is too much power concentrated in certain areas and there is also a need for there to be a national discussion where the entire country can lend its voice in creating an adequate system that will be beneficial to all.

Indar contended that there is a need to examine the sustainability test for SWF withdrawals properly as well as the role of Parliament, which he said should be expanded more.

“We have the role [of Parliament] here is to approve the fund and the annual budget [and] we believe that the reporting responsibility should be to Parliament. The Ministry of Finance… we believe that they have too much of a role,” Indar added, while stating that they also have an issue with the sovereign investment committee, which is currently too narrow and the GCCI also has an issue with one person “saying what to do with millions.”

He also added that the role of the Bank of Guyana needs to be examined as well as the eligible asset classes for investing oil revenue.

“The entire eligible asset classes need to be looked at and how you are going to measure loss, how often it will be reported, and who will be managing them,” Indar contended, while adding that they will be providing written responses of their review to the government and will also have a national forum where the terms will be discussed.

He added that “it does not look right” from an investment perspective.

The green paper lays out fiscal rules for the management of the proposed Natural Resource Fund (NRF) 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 the following five members appointed by the Minister of Finance,” the document states. It points 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.

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