Category: Press Releases

11 Jun
By: MOF Communications Unit 0

Payment for second lift deposited into NRF account

(Georgetown, June 11, 2020) – The Natural Resource Fund was yesterday credited with US$35,063,582.06. This represents payment by Shell Western Supply and Trading Limited for Guyana’s second lift.

The total holdings of the NRF as at June 11, 2020 is US$94, 921,803.00

 

-END-

  Contact: Wanita Huburn
Phone: 592 -655-9497
Email: whuburn@finance.gov.gy
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23 Apr
By: MOF Communications Unit 0

Press Release – Natural Resource Fund

The Natural Resource Fund Act 2019, which was enacted by the Parliament of  the Cooperative Republic of Guyana, in January 2019, established our nation’s sovereign wealth fund (SWF), known as the Natural Resource Fund (NRF), for the purpose of managing the natural resource wealth of Guyana for the present and future benefit of the people and for the sustainable development of the country. On December 11, 2019, the Government entered into an operational agreement with the Bank of Guyana for the operational management of the NRF. On December 20, 2019, Guyana became an oil producing country, and, in February 2020, the Government’s first entitlement of crude oil was lifted from Liza Destiny, which amounted to just over 1 million barrels. On March 11, Shell Western Supply and Trading Limited, the company that was contracted to lift Guyana’s first three cargoes deposited US$54,927,994.80 into an account held by the Bank of Guyana, as payment for the first lift in February 2020

In establishing the NRF, the Government committed to managing the Fund according to the principles of good governance, including transparency, accountability and international best practices, including the Santiago Principles. The NRF Act 2019 requires several reports to be published, including, but not limited to:

1) Reports from the Public Accountability and Oversight Committee, Macroeconomic Committee and Investment Committee;

2) Reports on withdrawals from the NRF, to be included in the annual budget proposal and, if needed, in a Supplementary Appropriation Bill;

3) Annual reports of the NRF, including audited financial statements;

4) Quarterly reports and financial statements of the NRF; and

5) Monthly reports of the NRF.

On April 15, 2020, the Bank of Guyana, in accordance with section 38(1) of the NRF Act 2019, as well as the operational agreement with the Ministry of Finance, submitted the monthly report on the NRF for March 2020. On April 23, 2020, the Ministry of Finance, in accordance with section 42(c) of the NRF Act 2019, has published this report on its website for the public to access.

Download NRF Statement of Accounts:

Natural Resource Fund Statement of Accounts – March 2020
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21 Jan
By: MOF Communications Unit 0

Guyana’s Natural Resource Fund attains associate membership at IFSWF

(Georgetown, 21-01-2020) – Guyana’s Natural Resource Fund (NRF) has attained associate membership of the International Forum of Sovereign Wealth Funds (IFSWF); a global network of sovereign wealth funds of more than 30 countries including Singapore, Botswana and Australia. 

The IFSWF works to foster good governance, transparency, accountability and prudent investment practices within its members through the application of the Santiago Principles, helps them navigate the complex investment environment through knowledge sharing, and represents the ‘views of members to the wider financial community.’ 

The NRF was established in 2019 under the Natural Resource Fund Act 2019 and is designed to manage the revenues garnered from Guyana’s petroleum resources for the present and future benefit of the people, and for the sustainable development of the country. The Ministry of Finance has entered into an operational agreement with the Bank of Guyana to manage the Fund. 

The achievement of associate membership demonstrates Government’s commitment to transparently manage Guyana’s petroleum revenues.  

Read more about the NRF at finance.gov.gy. and at https://www.ifswf.org/members/natural-resource-fund.

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12 Dec
By: MOF Communications Unit 0

Ministry of Finance and Bank of Guyana Sign Operational Agreement for the Operational Management of the Natural Resource Fund

As part of Government’s preparations towards becoming a petroleum producing country and in anticipation of first oil in 2020, work commenced in earnest in 2017 on the drafting and consultations regarding the development of a Sovereign Wealth Fund (SWF) legislation for Guyana. Different countries who are fortunate enough to have such funds, determine the scope and objectives based on national development priorities and the Santiago Principles. The better managed of these funds have benefited from a core of competent professionals, effective and robust institutional mechanisms and transparent management and reporting mechanisms.

In Guyana’s case after several rounds of internal consultations, international expert consultations, examination of other country experiences and drafting support, particularly from the Commonwealth Secretariat an initial draft legislation was developed. In an effort to ensure awareness and secure public feedback on the content of a potential SWF, His Excellency requested the development of a Green Paper to be laid in Parliament. A Green Paper titled Managing Future Petroleum Revenues and Establishment of a Fiscal Rule and a Sovereign Wealth Fund was developed and published in August 2018. This supported wider stakeholder consultations with the private sector and civil society as well as international agencies and experts. Based on the feedback and comments received for our private sector groups and civil society engagements the Natural Resource Fund (NRF) Bill No. 14 of 2018 was tabled in Parliament on November 15, 2018 and assented to on January 23rd, 2019 – making the Cooperative Republic of Guyana one of the few countries in the world to have developed this type of legislation ahead of first oil!

Notable features of this landmark legislation – the Natural Resource Fund Act – include (i) a withdrawal rule that permits a flow of funds from the NRF into the national budget that is formula based; and, (ii) a design to achieve multiple objectives of – a) reducing the transfer of the volatility of oil prices and production into the economy, b) meeting the immediate and urgent development expenditure needs of our country and in turn benefits to our people, and c) intergenerational savings to ensure that the benefits of the extraction of this resource are shared across both current and future generations, recognising that oil is finite.

In order to ensure those savings are wisely and safely held and invested, the NRF Act of 2019 stipulates the mechanisms under which revenues will be deposited and how investments are to be conducted, including the eligible investments allowable. The Bank of Guyana has been mandated by the NRF Act to ensure that the NRF is managed prudently. Other countries that have similar funds managed by their Central Banks include Norway, Chile and Botswana. The inflows to the NRF will be in United States of America Dollars which will be deposited in US bank accounts held by the Bank of Guyana. It is important to note that most central banks and SWFs manage reserves by holding them in foreign denominated currencies outside of their jurisdiction. In preparation for its role as operational manager of the NRF, the Bank of Guyana has begun building additional capacity, supported by the World Bank’s Reserves Advisory and Management Programme (RAMP), with whom an agreement was signed on October 1, 2019.

On December 11, 2019, the NRF was one step closer to being operationalised after the Minister of Finance, Hon. Winston Jordan, and the Governor of the Bank of Guyana, Dr. Gobind Ganga entered into an Operational Agreement for the operational management of the NRF, in accordance with sections 11 and 12 of the NRF Act 2019.

This Agreement sets forth the obligations of the Bank of Guyana as the operational manager of the NRF, which include: 1) receiving and accounting for all deposits into the NRF; 2) investing the NRF In eligible asset classes; 3) appointing private managers and custodians; 4) reporting on the performance of the NRF on a monthly, quarterly and annual basis; 5) implementing management systems, procedures and risk management arrangements in accordance with international standards; and, 6) providing the public with information on the NRF as required by law; among others.

The Agreement, which will be published on the Ministry’s website in accordance with section 42 of the NRF Act, also includes the obligations of the Minister of Finance as the overall manager of the NRF that will allow for the effective operational management of the NRF by the Bank of Guyana. Additionally, the Agreement identifies certain principles for the operational management of the NRF to ensure transparency and accountability. Other important aspects of the Agreement include the fees to be charged by the Bank of Guyana, procedures for the appointment of private managers and custodians, and the liability for losses that may occur.

Signing today is a significant next step in establishing strong institutional arrangements to support the effective management of our petroleum revenues.

 

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07 Jan
By: MOF Communications Unit 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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