Op-Ed: Prioritizing a Sovereign Wealth Fund – Preparing for prosperity now
By United States Ambassador Perry L. Holloway
As Guyana welcomed hundreds of delegates to attend its most recent oil and gas conference in February, the world saw a nation poised to be transformed. I am heartened to see that Guyana has now stepped fully into the limelight as one of the most important developing energy markets in the world. For the first time in its history, the Land of Many Waters is closer to seeing its potential realized. To echo the words of Minister of Natural Resources Raphael Trotman: Guyana’s time is now.
In spite of the often exaggerated gloom and doom pronouncements in the papers, Guyana is poised to be a very rich country for this region with considerable revenue streams in the future. The development model Guyana now chooses will need to be a decision the people of Guyana make together through a process of public consultations and legislative debate.
I want to emphasize that, as Guyana considers its future, it will not be enough simply to have a “rainy day fund” or even an investment fund, but to institute a revenue and investment framework that protects and effectively leverages wealth to transform the nation. As the development of a long-term vision for a green, sustainable economy continues, I hope conversations will continue to prioritize implementation of a strong comprehensive sovereign wealth fund bill, in the broadest sense, that is transparent, independent, inviolable, and non-partisan.
Let us be clear. When I speak of a sovereign wealth fund, I am talking about a fund that will immediately begin to invest in education, health, infrastructure, agriculture, and security. I am referring to a concerted effort by all stakeholders to start a continuous conversation on how best to implement fiscal plans that directly address the needs of all Guyanese now. The urgency cannot be understated.
Difficult decisions are ahead, whether that involves identifying the right talent to manage the fund (wherever it is found), or even making the difficult decision to borrow at concessional rates that will not be available tomorrow to develop the present. However, the investment today will pay off tomorrow. The development of a comprehensive sovereign wealth fund is the opportunity Guyana has been expecting to leverage the prosperity of the future into the development of the present. It is the right call and sends the right message to the Guyanese people and international donors and investors alike, that, above all else, Guyana is ready to come to the table with a plan that puts long-term, sustainable fiscal planning at the service of today’s progress, while protecting tomorrow’s future.
Anyone that follows the oil and gas industry knows that, whether Guyana is ready or not, the world is ready for Guyana to become not only a petroleum producer, but also a future example of what is possible with technological innovation, hardworking people, political vision, and an appropriate legislative and regulatory framework. Guyana has already exhibited hard work, innovation, and vision to get to this point in the development of the industry.
Now, Guyana can show the world that it is possible to get a legal framework right, even when many other countries have not. Too much is at stake, and decisions, albeit measured and well-considered, must lead to decisive action in the implementation of a fund. I know I am optimistic about Guyana’s potential success and so is the world.
In writing this, I do not intend to imply that work is not being done to develop a sovereign wealth fund. In fact, I strongly commend the Government of Guyana for working on a draft bill and preparing to have a fund in place by 2020. Instead, I want my comments to encourage the people of Guyana to believe in transformative change as something that is possible.
I want to inspire them to remain committed to the conversations ahead because they will be necessary and important. The input of the Guyanese people into the process will be instrumental to ensure the appropriate funds and mechanisms are in place to protect prosperity and pave a pathway to long-term growth. Ultimately, that is what will mark success, not a specific type of fund, although excellent examples exist, but a fund that builds on a future aligned with prosperity and hope.