Operation of Natural Resource Fund will conform to Santiago Principles – ‘Green’ paper
─ Santiago Principles promote transparency and accountability in management of Natural Resource Funds
─ NRF Act will detail sound legal framework for NRF’s operation
DPI, Guyana, Friday, August 17, 2018
The Government’s ‘Green’ paper states that the Natural Resource Fund will fully conform to the Santiago Principles, which consist of 24 generally accepted principles and practices which are voluntarily endorsed by the members of the International Forum of Sovereign Wealth Funds (SWF).
They promote transparency, good governance, accountability and prudent investment practices while encouraging open dialogue and deeper understanding of SWF activities.
It is on these principles that the management of the Natural Resource Fund (NRF) will be guided. This is specified in the ‘Green’ paper, “Managing Future Petroleum Revenues and Establishment of a Fiscal Rule and a Sovereign Wealth Fund.”
The Santiago Principles were welcomed by the International Monetary Fund’s (IMF’s) International Monetary Financial Committee in 2008. Among the objectives are compliance with applicable regulatory and disclosure requirements of countries in which SWFs invest.
Another principle includes ensuring that such funds have in place a transparent and sound governance structure that provides adequate operational controls, risk management and accountability.
The government has committed to ensuring that our NRF is fully aligned with these internationally acceptable standards, as the preparation begins for petroleum production come 2020.
To ensure this, the Natural Resource Fund Act (NRFA) would provide a detailed and sound legal framework for the operation of the NRF.
According to the ‘Green’ paper, the Act will make clear that the NRF would have no legal personality and would effectively be a pool of investments held by the Bank of Guyana.
The responsibilities of the National Assembly, the Ministry of Finance, the Bank of Guyana, the Macroeconomic Committee and the Sovereign Investment Committee will be clearly outlined in the Act.
Implementation of the aforementioned will ensure that the Natural Resource Fund- NRF fully complies with principle one.
The principle requires that the legal framework for the fund should be sound and support its effective operation and the achievement of its stated objectives. The legal framework must also ensure the legal soundness of the fund and its transactions.
The Key features of the NRF’s legal basis and structure, as well as the legal relationship between the fund and other state bodies, should be publicly disclosed.
The ‘Green’ paper details fully the mechanisms that will be put in place to guarantee compliance with all 24 Santiago Principles.
By: Stacy Carmichael
Image: https://www.quora.com/Do-Singapores-sovereign-wealth-funds-GIC-and-Temasek-follow-the-Santiago-Principles