New NRF Bill strengthens transparency and oversight – Finance Minister

─ improved management mechanisms proposed

The new Natural Resource Fund Bill 2021 emphasizes transparency and strengthened oversight. Assuring this was Senior Minister in the Office of the President with responsibility for finance, Dr. Ashni Singh. He has assured that the appointment of the Board of Directors of the Natural Resource Fund (NRF) will be transparent, and that this dispensation is vastly superior to that of the Act which is currently in place.

His assurance follows the tabling and first reading of the Bill in the National Assembly on Thursday.

Dr. Singh told DPI Friday, that the names of board members will be published. He said the mere fact that there will be a five-member board, adds a layer of scrutiny where the current Act falls short. 

Its directors will be appointed by the President, but Dr. Ashni Singh said whether it is the President who appoints the board, or not, its composition is stipulated in the Bill.

One would be nominated by the National Assembly, and another would represent the private sector. One provision prohibits the appointment of any person who has a conflict of interest. 

The Bill’s instruction for their selection is that they would be selected from “among persons who have wide experience and ability in legal, financial, business, or administrative matters.”

The Bill retains some features of the current Act, but Dr. Singh said it bears fundamental differences, including stripping away the vast powers of the minister in the management and oversight of the fund, to give them to the board. 

Outlining the ministerial powers in the old Act, Dr. Singh said “The minister oversaw the management of the fund. The minister granted all of the approvals that were necessary. The minister approved the amounts that were going to be involved in the determination of the fiscally sustainable amount. Essentially, the minister was everywhere in the Act, and there was no professional board…”

“In the new bill, the minister has much more limited and restricted involvement in the administration of the Act.”

Transparent withdrawal rule

Besides the appointment of a board, Dr. Singh posited that the formula used to determine maximum withdrawals from the Fund also removes the ability of the minister to manipulate the withdrawal process. 

“Under the APNU+AFC Act, nobody could pick up that Act or compute or calculate or figure out how much was being transferred from the fund to the budget. So, the framework and formula for transferring was completely opaque, devoid of any transparency and susceptible to tremendous manipulation, because the minister was himself involved in determination of the fiscally sustainable amount, etc. The minister under the new framework, has absolutely no involvement in the determination of the amount.” 

Under the proposed dispensation, the minister said that anybody can pick up the Bill and be able to know how the amount that will be transferred to the budget was determined. 

The Bill states that in any given year, the government may withdraw 100 per cent of the first US$500 million of deposits from the previous fiscal year, 75 per cent of the second US$500 million, 50 per cent of the third, 25 per cent of the fourth, five per cent of the fifth, and three per cent of any amounts in excess of the first two US$500 million.

Asked whether he would describe the rule as liberal, Dr. Singh said that he would not. 

“I would say that it strikes an appropriate balance between the imperative of saving into the longer term, and in the shorter term, being able to address the development imperatives of the country. An appropriate balance has to be struck between the two.”

Hefty punishment for secrecy 

Dr. Singh reminded that the Bill has an anti-corruption mechanism that would prevent secrecy in the collection of funds. 

“We have now introduced the requirement to publish in the Official Gazette and table in Parliament, every single receipt into the fund within three months, which is a feature that was not in the previous Act. And what that does, is it ensures that the fiasco whereby the APNU+AFC minister attempted to conceal the receipt of US$18 million can never happen again…”  If someone fails to comply with the obligation of publishing this information, they will be held liable on conviction to indictment to a fine of $5 million and imprisonment for 10 years. These provisions, the minister said, make the Bill vastly superior to the current Act.