NEW changes to the Act Governing the Natural Resources Fund (NRF), also known as the Sovereign Wealth Fund (SWF) in Guyana, will permit the inclusion of funding from that source — based on oil payments — for the new financial year and its associated budget.

After a week of heated Parliamentary debate, president of the Co-operative Republic of Guyana Mohamed Irfaan Ali signed into law changes on December 31, 2021 which will see the establishment of an independent body for the management of the fund, removing powers previously residing in the minister of finance. Opposition lawmakers objected but were outvoted.

In his 2022 new year address. Irfaan Ali told his audience, “The NRF flows to you, to improve your lives now; to deliver more jobs and better wages.”

A Reuters report commented that the changes made now frees up the Government to use the oil money in the 2022 budget.

On Wednesday December 29, 2021 Guyana’s Parliament approved new local content rules for oil producers and an independent sovereign wealth fund to oversee earnings from oil.

Mohamed Irfaan Ali, president,commented in his address, “It is obvious that some of the money from the NRF, which now stands at approximately US$534 million, must be spent on your welfare and well-being. It is for that reason that the new legislation provides a mechanism by which the Parliament will approve the transfer of funds for projects and programmes that the Government has to carry out to raise your standard of living, to improve your circumstances and to give you a better life. And, I add, it has to account for every cent of that money.”

President Ali added, “When transfers are made, to what department, for what purpose, and the results of the spending – all have to be made public. It has to be audited, the audited report has to be presented to the National Assembly, and of course the PAC will have a chance to review the auditor general’s report.”

New funds flowing to the SWF are from income generated by new oil finds, totalling an estimated 10 billion barrels of oil and gas.

It is expected that the resources arising will transform Guyana’s agricultural and mining economy in a nation of about 800,000 people.

Under the latest changes, the Natural Resources Fund assigns oversight of oil revenue to Parliament instead of the finance ministry.

Proceeds are assigned to “essential projects that are directly related to ameliorating the effect of a major natural disaster”, according to the Bill.

Front-runner oil explorer in Guyana, Texas-based ExxonMobil Corporation last Thursday reported that the rise in oil and gas prices in the fourth quarter generated operating profit of $1.9 billion, returning to 2021’s annual profit.

In 2020 ExxonMobil posted a loss of $22.4 billion in the past due to write-downs due to falling oil prices and lower refining margins.

Guyana’s central bank, the Bank of Guyana, has oversight also for the Natural Resources Fund. Arrangements were pursued with the Federal Reserve Bank of New York (or the New York Fed) for deposit.