Remarks by Ambassador Sarah-Ann Lynch
Berbice Chamber of Commerce & Development Association’s 87th Anniversary Luncheon
Wednesday, June 12, 2019
Good afternoon to you all.
Thank you Mr. Sookhai for those warm words of welcome. On behalf of the United States Government, I wish to congratulate the Berbice Chamber of Commerce and Development Association (BCCDA) on your 87th anniversary celebration. I think that makes you one of the most experienced Chambers in all of Guyana.This is indeed an extraordinary milestone! Thank you for inviting me to participate in this event. What an honor to be here!
I was told I could choose my topic, so I chose something timely and important to all, no matter your business.
As you are aware, Guyana recently accomplished a major milestone of its own, by establishing the Natural Resource Fund. For those who may not be completely familiar, the Natural Resource Fund, or “NRF” is a government-owned investment fund. Also known as a sovereign wealth fund, the NRF is set up to invest revenues from oil and gas (and other natural resources), in order to protect and boost the national economy.If implemented immediately and efficiently, it should provide Guyana with the opportunity to invest in its long-term future as well as today’s infrastructure, health, education, security, and even agriculture. I must congratulate the people of Guyana for taking this important step, and doing so before the first oil production and before oil profits begin rolling in next year.
But this step, as important as it is, is just the first. To ensure the fund, and through it, Guyana, both meet their full potential, requires more hard work, and not just by the government. The fund exists in law, but now must be implemented. Now is the critical time to get this right, and this afternoon I would like to talk to you, the private sector, about the important role you play in ensuring that the fund achieves its purpose.
For countries exporting petroleum and other nonrenewable resources, the principal challenge is to transform such transient resources into stable and sustainable future income. Effective wealth management has therefore become an important public sector responsibility. Many countries have responded by creating similar sovereign wealth funds. Worldwide, an estimated $2 to 3 trillion USD are under the control of sovereign wealth funds. Very soon, Guyana will add to that number.
Even though management of wealth funds is primarily a public sector responsibility, their operation and success is heavily dependent on a proactive private sector participating in administration and oversight of the plan. Studies have shown that the most effective sovereign wealth funds are four things: (1) independent, (2) transparent, (3) inviolable, and (4) nonpartisan (notice I did not say bi-partisan).
Now that the plan is established, it is time to shift our attention to the actual implementation of the Fund. That is, how will it actually work, and how can the Guyanese private sector, including the BCCDA, help ensure each of these four principles is instilled in Guyana’s NRF?
Let’s start with the first principle: a plan that is Independent. The NRF law says that the fund will be overseen by independent committees comprised of individuals who are not beholden to any interested entity. Why is this important? It is important because no process can be considered truly independent if it is controlled by persons who stand to benefit inordinately from a particular outcome, whether financially, politically, or in other ways. For example, the law provides that the Public Accountability and Oversight Committees will have representation from private sector bodies including the Bar Associations of Guyana, the Guyana Press Association, and the Private Sector Commission of Guyana. Similar provisions have been made regarding the private sector in the other committees. I know this chamber has a working relationship with the Private Sector Commission, and that the PSC has in place a Natural Resources Management Committee which looks at matters such as the NRF. I urge you to take the lead in utilizing new and existing mechanisms such as community meetings and workshops to educate the populace to ensure the NRF is implemented in a way that can make all Guyanese proud.
Looking at the second principle: Transparent. We all know how important transparency is in the fight against corruption. But fiscal transparency refers to something more. It means publication of high quality information on how a government (or an independent Natural Resource Fund) receives, spends, and manages a public resource. The BCCDA should push to ensure transparency at all phases of implementation. For instance, one of the provisions of the legislation states that, “The Minister may, through a competitive and open procurement process, procure the services of an investment advisory services company to provide advice on the Investment Mandate.” In all likelihood, the company selected would be a private sector one. The BCCDA and other private sector agencies can exercise due diligence to ensure that this advisory company is competent and reputable. You can also play a role in advising the Government as it develops its shortlist of potential firms.
Further, the BCCDA and its private sector partners can be involved in ensuring transparency in accountability, oversight and management of the Fund to help ensure that there is no misuse of the Fund and that all of Guyana benefits from its operation. Simple steps, such as always advocating for regular public disclosure of the investment objectives of the NRF, its funding, withdrawals and spending as well as other pertinent information, can go a long way towards this goal. Budget advocacy provides another method towards establishing transparency. You, the BCCDA, can offer insights and guidance to the budget authorities on various NRF-related matters as the Government prepares the national budget.
And, I might add that in all your efforts for transparency, always remember that you have the strong support of the international community in these efforts; we all have an interest in seeing the oil resource lead to the best possible outcome for Guyana and its people.
Moving on, a successful fund is Inviolable or secure. The Natural Resource Fund is not just any law. It will play a very important role in the economy. Now that a framework is in place, it should remain in place for the foreseeable future. Of course, as times goes on, amendments and adjustments may be needed. However, advocacy by the BCCDA and its sister private sector agencies must be directed at ensuring that a Sovereign Wealth Fund remains sacrosanct. Here, you can discuss with the legislators, policy makers, and across the government as a whole. Don’t just talk to your friends; political fortunes ebb and flow, but a Natural Resource Fund and its defense must be constant across all governments for decades to come, so that all those current and future governments remain accountable for staying true to the spirit of the fund and keeping it alive. This requires a constant, pervasive message regardless of who is in power at any given time.
This need for stability and accountability across the years is why our final principle is so important. The fund must be Non-partisan. It is for the good of all Guyanese, not just today, but for your children, your grandchildren, and even your grandchildren’s grandchildren. As such, the NRF must not be tied to any part of the political machinery. This is not about politics; it is about economics. You, as representatives of the private sector, must do your part to ensure that the decisions your organizations make are impartial, objective, and free from political bias so that they remain focused on economics rather than politics. This will help keep the fund non-partisan, giving your counsel on the fund more respect and so more weight.
And what about the question I asked earlier – what can the BCCDA and other private sector groups do to ensure the hallmarks of a successful Sovereign Wealth Fund are instilled in the NRF? It boils down to this: embrace your role as an engaged stakeholder, lobbying for expertise, information-sharing, and transparency, and so broadening the exchange of ideas. You have a unique opportunity – I would say even a responsibility – to advocate for government action with the goal of ensuring that the NRF is now implemented, before the profits from first oil begin, to ensure those profits benefit the Guyanese people well into the future. You are not alone. This chamber, and others like it throughout the country, represents a diverse array of Guyana’s citizens and voters, but also, I have to imagine, its largest taxpayers. Together, I encourage you to collaborate with other stakeholders to devise a calculated strategic plan of action that targets job creation, investment, and long-term revenue management.
As I keep telling people, this is an exciting time to be in Guyana, but it is also a critical time for Guyana’s future. That future starts now, and I look forward to the BCCDA and other private sector agents playing a vibrant role in molding it, including by creating a robust framework to implement the Fund and manage the risks associated with it.