Category: Highlights

07 Jan
By: Tanika Jones 0

Minister of Finance responds to KN’s article on the NRF

Mr. Adam Harris
Editor
Kaieteur News

Dear Editor,

I would like to respond to article, “Natural Resource Fund Bill Riddled with Loopholes for risky Investment” which was published in the online edition of Kaieteur News of 5 January, 2019 (https://www.kaieteurnewsonline.com/2019/01/05/natural-resource-fund-bill-riddled-with-loopholes-for-risky-investment/).

In that article, reference was made to the passage of the Natural Resource Fund Bill in the National Assembly, on Thursday, January 03, 2019. In particular, it was stated that the Bill was passed with no changes made to the flaws highlighted by international and local transparency advocates. Contrary to this piece of misinformation, the Bill, which was laid in the National Assembly on 19 November, 2018 underwent substantial revision to incorporate many comments received from local and international individuals and organisations, including the Natural Resource Governance Institute (NRGI). Had you taken the time to review the Bill that was passed in the National Assembly, prior to rushing to the press, you would have realized that many of the relevant comments made by the NRGI on the Green Paper were actually addressed in the Bill.

For example, the Bill clearly limits investments to certain assets. This is articulated in Section 31, where there is a detailed list and criteria for eligible asset classes to which investments of the Natural Resource Fund are limited. Additionally, the Fund will be invested according to the principle of passive investment management (Section 35), which means that investments shall be made to track certain indices. In these ways, the Bill clearly limits investments to certain assets. Additionally, Schedule Two of the Bill sets ceilings and floors for investments in various asset classes, which limits the riskiness of investments. The Investment Mandate, which would include instructions on investments must, also, would include directions relating to the management of market and other financial risks, as stated in Section 36 of the Bill.

The newspaper article also erroneously stated that the Bill does not require reporting on all assets financed by the NRF. In the annual report of the Fund, the Bill mandates that the report include the market value for each individual eligible bank deposit, eligible Treasury bill, eligible sovereign bond, eligible corporate bond, eligible equity, eligible commodity and eligible derivative held by the Fund. This is included in Section 41 of the Bill, and Section 42 requires that this report be published on the Ministry’s website.

This landmark piece of legislation has been favourably received by many local and international experts and organisations, contrary to what was published in your newspaper. I note, however, your attempts to be less caustic with your commentary, as evidenced by your quoting extensively from comments made by the Commonwealth Secretariat Adviser (See “Natural Resource Fund Bill not perfect”, Kaieteur News, January 07, 2019, p 8). While the Ministry of Finance will continue its engagement with the public on the legislation, the media are asked to play their roles as educators and purveyors of truth and accuracy. I encourage all interested persons to download and read the Natural Resource Fund legislation, which can be found at www.finance.gov.gy.

Yours faithfully,

Winston Jordan
Minister of Finance

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03 Nov
By: Tanika Jones 0

IsDB concludes Mission to Guyana

The Ministry of Finance has just completed the successful hosting of a Programming Mission by the Islamic Development Bank (IsDB) to Guyana that will soon realise deeper ties between the two countries as they seek to identify projects to accelerate Guyana’s development.

The Mission which concluded on Friday, November 2, 2018 saw three intense days of meetings between a team of officials from the IsDB led by Dr. Sobir Komilov – Regional Manager for Latin America and the Caribbean; and included Mr. Saifulla Abid –Senior Country Manager for Guyana IsDB; Mr. Hamady Soma Ba – Relationship Manager from the International Islamic Trade Financing Department (ITFC) and Mr. Ahmed A Khalid – Regional Head (Asia) of the Islamic Corporation for the Development of the Private Sector (IFC) and representatives from the Public and Private Sectors.

The Mission aimed at developing a pipeline of potential projects for the medium term 2019 – 2021 that would inform the work programme of the IsDB; discussions were focused therefore, on identifying projects and programmes that seem most likely to have the greatest development impact in Guyana.

It was coordinated by the Ministries of Finance and Business under the guidance of the Hon. Winston Jordan, Minister of Finance and Governor for Guyana at the IsDB. Discussions were held with the Ministries of Public Health, Education, Agriculture, Public Infrastructure, Communities, Social Protection, GoInvest, the Georgetown Chamber of Commerce, and several Commercial Banks.

The challenges and opportunities to advance Guyana’s development agenda were explored and priorities for action identified. Health Care, Waste water treatment, renewable energy, TVET, housing and infrastructure were among the areas identified for initial consideration in 2019.

To close the mission, an aide memoir was signed between the Government of Guyana and the IsDB Group with both sides agreeing to continue collaborating on the development of the country.

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08 Sep
By: Tanika Jones 0

Guyana is approved for first loan from the IsDB, GPL’s Upgrade programme gets USS$20m for more reliable power supply

Georgetown, September 8, 2018

Government’s efforts to provide citizens with a more sustainable and stable supply of electricity are rewarded as Guyana has received approval from the Islamic Development Bank (IsDB) for a loan of US$20m for the Guyana Power and Light (GPL) Utility Upgrade Programme to effect a comprehensive turnaround of its electricity distribution.

This loan is the first sum to be disbursed from the resource envelope of US$900m that was extended to Guyana by the IsDB in 2017. Guyana has already benefitted from two grants from the Bank totalling more than US$500,000.00.

The Guyana Power and Light has long been challenged by its inability to provide a reliable supply of electricity and suffers high levels of losses. This has been compounded by a rapid increase in demand for energy by residential and commercial users. The GPL Utility Upgrade Programme is co-financed by the Inter-American Development Bank and the European Union, and upon completion will reduce losses, realise a more efficient and reliable service and deliver a better quality of electricity for households and commercial users.

The Utility Upgrade Programme is part of GPL’s Development and Expansion for the period 2014 to 2021 which aims to reduce the overall losses in the power system. The loan will facilitate:

  1. The rehabilitation of 153 km of GPL’s medium voltage and low voltage network and 6, 941 smart meters, including the associated transformers, service lines and distribution boxes.
  2. The rehabilitation and extension of two 69/13.8KV substations at Kingston and Vreed-en-hoop including equipment switchgear, power transformers, rerouting of circuits distribution feeders and cable connections.

It will also finance consultancy services for the preparation of designs and specifications for the sub-stations and the site supervision for the works related to the Kingston and Vreed-en-hoop substations, as well as support the existing project management unit by financing additional specialised engineers and technicians to reinforce the existing team. GPL is the Executing Agency for the project and will operate under the aegis of the Ministry of Public Infrastructure.

Minister of Finance, Hon. Winston Jordan will sign the Agreement with the IsDB on September 19, 2018 in Saudi Arabia. Since becoming a member of the Bank, Government has been aggressively pursuing projects that will increase Guyana’s infrastructure and optimise its productivity in the areas of agriculture, trade and competitiveness and human and rural development having committed to the diversification of Guyana’s economy in preparation for first oil in 2020.

Guyana became a member of the IsDB in 2017; the partnership was formalised with a mutual commitment to a five year work programme.

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08 May
By: Tanika Jones 0

Minister of Finance signs 2 year concession renewal with GGDMA and GWMO, ties concessions to output

Georgetown – President of the Guyana Women Miners Organisation (GWMO), Urica Primus and President of the Guyana Gold and Diamond Miners Association (GGDMA), Terrence Adams, today signed a 2 year concession renewal agreement with the Government of Guyana. This agreement boasted many firsts for the relationship between the two private sector bodies:

  1. It was the first time that the GWMO signed the agreement as an individual entity;
  2. For the first time, the agreement has been renewed for a two year period rather than annually, and
  3. The concessions granted are tied to various levels of declarations.

 

Other signatories to the agreement were Hon. Winston Jordan, Minister of Finance; Godfrey Statia, Commissioner General, Revenue Authority (GRA); Newell Dennison, Commissioner General, Guyana Geology and Mines Commission; and Dr. Mahender Sharma, Chief Executive Officer, Guyana Energy Agency. Also present at the signing ceremony was Hon. Raphael Trotman, Minister of Natural Resources.  

Minister Jordan in brief remarks pointed out that, “The agreement is the third that has been signed by Government but that it was more comprehensive and was accomplished through evidence-based negotiations.” He also said that it comes on the heels of other budgetary measures that were put in place as a mark of the Government’s unwavering support for the sector and appreciation for the invaluable contribution that miners make to the country’s economy. He appealed to the miners to always be cognisant of Government’s support and urged that they in turn ensure that declarations are made in the same spirit.

The Mining sector has benefited from significant interventions, since 2015, by way of tax concessions on machinery, equipment, fuel and vehicles for small and medium scale miners; a reduction in the Tributor’s Tax from 20% to 10% and a sliding scale percentage based on the price of gold, which replaced the 2% of gross proceeds. Additionally, more than $1 billion was allocated in the 2018 Budget for the upgrade of key roadways in the Hinterland, so as to provide easier travel and transportation access for miners and loggers, in particular, within hinterland communities.

The Ministry of Finance, in further efforts to provide support for the sector, has facilitated several consultations and collaborations between Government and stakeholders. These have resulted in a more timely resolution to challenges within the sector.

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20 Apr
By: Tanika Jones 0

Bank of Guyana responds to Guyana Times article: Guyana’s gold reserves prudently managed

The Bank of Guyana notes with alarm an article in the Guyana Times captioned ‘Bank of Guyana gold reserves plummet,’ published on April 18, 2018. The caption is misleading and the article itself recklessly presents a woeful interpretation of available data.

For the record, the Bank of Guyana trades gold and replenishes the stock based on market opportunities. Gold is not managed as an exclusive reserve asset for holding, but as part of a portfolio of assets. Gold may be sold for a number of reasons; including maximizing profits, rebalancing of the portfolio, meeting liquidity needs, or optimizing opportunities in other asset classes. With the price of gold as high as USD1,364.00 recently, the Bank has been trading gold as any Bank worth its salt will do.

Dips in the reserves therefore, reflect strategic trading rather than any involuntary disposal of gold.

BoG therefore, wishes to assure that the benchmark for the holdings of international reserves are vigilantly adhered to and upheld. Additionally, the domestic market has an excess supply of foreign currency to meet domestic demand while maintaining a stable foreign currency exchange rate.

Press Release: Bank of Guyana responds to Guyana Times article
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14 Mar
By: Tanika Jones 0

Ministry of Finance responds to Op-ed by US Ambassador

The Ministry of Finance notes with interest an Op-ed by US Ambassador Perry Holloway, which appeared in the local dailies on Tuesday, March 13, 2018, captioned ‘Prioritising a Sovereign Wealth Fund, Preparing for Prosperity Now.’

The Ministry of Finance appreciates the spirit of the Op-ed, but wishes to make clear that the establishment of  a Sovereign Wealth Fund (SWF) is already designated priority for the Government of the Co-operative Republic of Guyana (GCRG). We would also like to emphasise that it is the government and people of Guyana who will decide on the tenets of the SWF.

The suggestions contained in the Op-ed may give the impression that the GCRG and, by extension, the Ministry of Finance, under whose remit the drafting of the legislation for the SWF falls, has not made significant progress on this important piece of legislation. That impression is misinformed.

Consequently, the Ministry wishes to use this opportunity to remind the citizens and other stakeholders that the foundation for the establishment of the SWF began since 2016. This was announced more than a year ago at the opening of Guyana’s National Seminar on Preparing for First Oil, which was facilitated by Chatham House.

At that forum, the Minister of Finance made clear the Government’s intention to develop a Fund to govern the use of petroleum resources as a key legislative priority. He also highlighted the objectives of such a Fund as:

  1. to advance critical development and investment needs within the country (via the national budget);
  2. to address issues of stabilisation of the economy, and
  3. to ensure savings were made to guarantee inter-generational benefits from the extraction of this finite natural resource.

Those objectives reflect a comprehensive framework that will guide the prudent management of future oil revenues for the benefit of current and future generations, in keeping with the government’s agenda.

Therefore, government’s investment expenditure will be driven by the Green State Development Strategy (GSDS) – our national development plan – and, by the development priorities articulated and implemented through the National Budget, which has an established consultation cycle of its own.

In developing the draft SWF legislation, the Ministry of Finance is receiving support from the Commonwealth Secretariat. A green paper on the subject will be published in 2018, and consultations will  occur subsequently. The legislation is intended to be laid in Parliament by the end of 2018.

It is important to note that as a new oil producing nation, Guyana is ahead of many countries, having already taken the initiative to establish a Fund of this kind.  Even Norway, which today is promoted as a model country in petroleum resource management, did not create a Sovereign Wealth Fund until several years after its first oil.

This of course does not mean that the establishment of such a Fund is not immediately necessary, but rather, it demonstrates the government’s commitment to good governance, transparency and accountability, by ensuring that a legislative framework is in place to safeguard our national patrimony, prior to the commencement of oil production.

The Ministry of Finance values the comments from our bilateral and multilateral partners on the draft content of the SWF, and welcomes further engagement and support. However, we would like to recommend that  our partners exercise restraint when pronouncing on Guyana’s national priorities, and to refrain from making premature statements on its petroleum resource management, given the existing challenges of managing expectations and avoiding the Dutch disease.

The Ministry of Finance welcomes direct engagement with our partners as we navigate these pivotal moments in the history of our country’s development.

Wanita Huburn
PRO

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