“Guyana will be one of the few countries to have a Sovereign Wealth Fund (SWF) in place before ‘First Oil’”. So observed Minister of Finance, Mr. Winston Jordan, after President David Granger had assented to the legislation establishing the Guyana’s Natural Resource Fund (NRF) (Ch 29/03/2019). Not so long ago, this column observed that establishing SWFs ‘is akin to establishing an airline in the 1960s and a stock exchange in the 1990s – signs of modernization and must-have institutions’ (01/05/2019). However, it may be useful to note that Norway, whose SWF has become the model for many others, found oil in 1969 and only established its fund in 1990. What is much more important are the investment and other policies that are adopted by the government and how politically accountable the fund will be. As to investments, the article mentioned above noted that Norway ‘only began saving abroad when it was no longer profitable for it to do so internally and generally, the focus for poor natural resource rich countries should be to invest in capacity building in both the private and public sector for them to be able invest well domestically.’
But the statement by the minister was not what caused me to smile and decide to write this article. On the same occasion he emphasised that ‘The Act is very strict about the withdrawal of funds, accountability and so on, are very, very tight and praised by a number of experts in the field … (but) the proof of the pudding will always be in the eating.’ I believe that the minister and his experts have been over enthusiastic because they failed to properly differentiate between the existence of rules and the possibility of their being effective in the extant context. Or – although I doubt it – like scores of others, they have a very restrictive and weak notion of political accountability, i.e. that it only entails being able to question and openly criticise political, public and other agents. Thus, this column is concerned with democratic political accountability; for without it SWFs become vulnerable to all manner of corrupt practices and managerial effectiveness in general is weak…..