– Bank to review draft SWF Act, provide technical support
Earlier this year, the World Bank agreed to give Guyana US$35 million in Development Policy Credit to help prepare the country to manage its future oil wealth. It turns out that a second tranche of financing will be given before first oil.
This is according to the Finance Ministry, which in a statement noted that it was presently hosting a Joint World Bank Mission comprising the International Bank for Reconstruction and Development (IBRD); the International Development Association (IDA) and the International Financial Corporation (IFC).
It is understood that the visit will last from October 1 to 9, 2018. According to the Finance Ministry, Government also shared the draft Sovereign Wealth Fund (SWF) Act with the World Bank officials, in a bid to have the Bank review and offer its technical advice on the document.
According to the Finance Ministry, the World Bank team “committed to providing more technical guidance and support as Guyana moves towards the completion of the draft SWF legislation”.
“The visit signals the Bank’s continued confidence in the macroeconomic stability of the economy and growing interest in Guyana’s development agenda, and the inclusion of the IFC underscores the importance Government has placed on ensuring that the new World Bank partnership framework incorporates policies and measures to support the development of a vibrant Private Sector that is geared to benefit from the emerging oil and gas sector.”
This Mission, according to the Ministry, is expected to kick start discussions on the second tranche of the Programmatic Fiscal and Financial Stability Development Credit. The Ministry revealed that the second tranche of money would be negotiated and disbursed to Guyana in 2019.
In addition, engagements with Government officials and the wider stakeholder community to prepare a Systematic Country Diagnostic (SCD) assessment for Guyana will be carried out. This assessment, according to the Ministry, is a precursor to developing a full Country Engagement Strategy that will provide data for the Bank’s future programming for Guyana within the institution’s next investment cycle.
It is understood that the Mission is led by World Bank Country Manager for Guyana with responsibility for the Caribbean Country Management Unit, Galina Sotirova. The Mission also includes Judith Green, Principal Investment Officer of the IFC and eight other senior technical experts, including oil and gas specialists.
“As part of its wider mandate, the Bank Mission consulted widely with the Private Sector, civil society, several commercial banks and the University of Guyana among other stakeholders,” the World Bank said.
There have been criticisms of the SWF framework, which places much power in the hands of the Finance Minister. A Green Paper, which was laid in the National Assembly in August, sets out preliminary plans on how the Government hopes to manage the revenue from oil and other natural resources, with clear objectives of the Natural Resources Fund.
The document states that the Finance Ministry will be responsible for the overall management of the Fund, including requested withdrawals in the annual budget proposal.
The Ministry is also responsible for “…calculating the Fiscally Sustainable Amount, drafting the Investment Mandate, entering into the Operational Agreement with the Bank of Guyana and drafting the annual report and reporting on the Fund through the annual budget”, the document said.
It sets out specific rules, including the Fiscal Rule, which caters for the development gaps, both in terms of human capital and physical infrastructure, that exist and the need to accommodate development spending via the national budget.
To oversee these decisions, the Government has recommended the establishment of a macroeconomic committee which would consist of five members, including a representative of the Finance Minister.
In terms of the management of the Fund, a sovereign investment committee would be responsible for advising the Minister on the investment mandate, but would also include a representative.
Further, the Green Paper states that the Bank of Guyana (BoG) will be the operational manager of the Fund. (Jarryl Bryan)
