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NATIONAL CONSULTATION NEEDED ON RESTRUCTURING NRF ACT

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In a recent zoom conference with the Guyanese “diaspora”, President Ali and Vice President Jagdeo indicated the Government’s intention to re-structure the Natural Resources Fund Act (NRFA). Two features of the restructuring were articulated by VP Jagdeo, one of which the PFG fully endorses and one with which we have fundamental differences.

Policy Forum Guyana (PFG) was heartened to hear VP Jagdeo state “the fund must be managed in a professional manner distanced from political interference”, since the current Act, in his words, “did not offer enough distance for politicians from its management”.  Politicians’ inclination to meddle is amply demonstrated by the chaotic situation in the sugar industry.

 

While restricting political meddling in the affairs of public sector enterprises is important, it is crucial also to avoid creating an autonomous NRF structure completely insulated from Parliamentary oversight. With the volume of funds likely to be at its disposal, whoever controls the NRF will control the economy. Norway was very keen to avoid this kind of separate entity with its political power. It solved the problem by the simple rule of taking away the oil money  from the budget and forcing the Government to raise revenue from taxation to fund the budget.

 

The simplicity of the Norwegian model is better suited to Guyana. Money in the Fund is invested passively, requiring very low management and oversight skills and its operations are open to the scrutiny and transparency the ruling party appears anxious to secure. Norway, contrary to what was stated in the ‘diaspora’ call, does not have two funds, one handling stabilization issues and the other savings. It has one Fund responsible for both functions.

 

Where PFG parts ways decisively with the Government relates to the comment that “it would be unconscionable to have children in the present day unable to attend school while the country saves for the future.

PFG agrees that it would be unconscionable to rob the current generation of children but the choice, as stated, is a false one. Whether children today are educated should not be juxtaposed with robbing future children of their education. The job of politicians is to protect all children’s present and future.

The health and education of the current generation should be paid for by raising taxes, royalties, licenses and permits from those who benefit from the privilege of converting public assets into private wealth. By contrast, Guyana exempts major beneficiaries in the gold, oil and extractive sectors from almost all taxes, providing duty-free privileges of every description to companies who have not the slightest interest in the future of Guyana’s children. Politicians, occupationally allergic to raising taxes, prefer negotiating confidential agreements with foreign companies.

As with inherited land or family jewels, so with commonly-owned inherited natural resource assets, future generations have a right to inherit as much as the current generation. Intergenerational justice is a right, not an option. The only way to guarantee justice is for all the money earned from the sale of assets to be deposited in a Sovereign Wealth Fund, recognizing that this Fund belongs to the next generation. The present generation has the right to any income generated from investments of the Fund, distributed as a Citizens’ Dividend.

All Guyanese, present and future are robbed of their inheritance by squandering assets in scandalously low sales to extractive companies. This global scandal is disguised and kept from public attention by the simple device of promoting oil ‘wealth’ as windfall’ revenue, rather than losses through the reckless sale of assets. This company-driven narrative implies that, like winning the lottery, oil income is pure luck. Rather than win-win and world-class lifestyles all around, the reality is ‘lose-lose’ for this generation and the next.

These important issues should not be disseminated indirectly to Guyanese citizens via zoom calls to ‘the diaspora’. Government has a constitutional obligation to protect the rights of future generations (Art. 149) and citizens have a constitutional right to influence political decisions that affect them (Art. 13). This constitutional rights framework is the proper umbrella under which national policy decisions should be debated, resolved and implemented.