Only Parliament can approve spending of oil revenue – Minister Jordan

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DPI, Guyana, Wednesday, June 06, 2018

Minister of Finance Winston Jordan has explained that only Guyana’s Parliament can approve government spending of anticipated oil revenue.

Critics and letter writers have erroneously suggested that the Sovereign Wealth Fund (SWF) will somehow be used to divert or allocate monies for politically directed projects.

But Jordan in an invited comment said this was certainly not the case: “All the monies go to the SWF. Withdrawals from the fund will be in accordance with fiscal rules that will be embedded in the legislation and approved by Parliament. The amount to be withdrawn is then placed in the Consolidated Fund and appropriated in accordance with existing accounting rules.”

He explained that the “the S in the SWF will be equated to Saving.” This was a point made by President David Granger as early as when he was running for office. In one of his first reactions upon hearing the news of the oil find by ExxonMobil, the future President promised at a rally at the Square of the Revolution on May 10, 2015, that “the profits will go into a Sovereign Wealth Fund to benefit future generations…” Three years later and after extensive consultations and advice from the international community the legislation for its establishment will soon be tabled in Parliament and the SWF will be in place in time for oil production in 2020.

The path that oil money would take is quite simple: Once Guyana receives revenue from the sale of its share of profit oil, the money would be placed directly into the SWF. Making sure Guyana gets its full share is one of the roles of the newly formed independent watchdog Guyana Extractive Industries Transparency Initiative which reconciles revenue flows paid by companies with those received by the government.

Once in the SWF, withdrawals would be authorized by the Parliament after considering the balance between preserving the wealth for future generations and the need for investment. The amount withdrawn after approval by Parliament is then sent to the Consolidated Fund. At this point, the normal procedure takes over. The Minister of Finance prepares an annual budget which can only be approved by a majority of the National Assembly.