Oil money will only be spent after parliamentary approval – Jagdeo
- NRF will remove wide powers of Finance Minister over management of funds
Proposed amendments to the Natural Resource Fund (NRF) Act outline a new model of how the government can withdraw oil revenues but Vice President Dr. Bharrat Jagdeo emphasises that the money will only be spent with parliamentary approval.
According to the First Schedule of the proposed amendments, the government can, in the first instance, withdraw all oil revenues accumulated in the NRF in the year that the new law comes into force and thereafter a limit will be set for future withdrawals.
Concerns have been raised that the government intends to withdraw massive sums of money as soon as the amendments are passed – which could be as early as Wednesday.
But at a recent private sector breakfast hosted at State House, the Vice President emphasised that the money from the fund will only be withdrawn to finance projects in the National Budget.
“… and the budget has to be debated in the National Assembly; so every single activity that will be financed by money flowing into the budget will be debated in the National Assembly,” Jagdeo explained.
He also reminded members of the private sector that the Parliamentary Opposition will also have Parliamentary oversight over the expenditure of the oil funds.
As per the proposed amendments, any withdrawals must be detailed in the annual budget proposals and the amount to be withdrawn should not include the various ceilings listed.
And according to Section 16(2) of the amendments, all withdrawals from the Fund shall be deposited into the Consolidated Fund.
For context, the national budget is presented to the National Assembly as the Appropriations Bill. And after consideration of the budget estimates, the members of the National Assembly vote on the Appropriation Bill.
If a majority of the members vote in favour of the Bill, the budget is passed. And this, Jagdeo explained, is how there will be Parliamentary oversight on spending from the Fund.
Oil sales and royalties thus far stand at US$534 million and are kept at the Federal Reserve Bank of New York.
The Vice President also addressed other concerns raised about the proposed amendments, including the Presidential appointment of a new Board of Directors to manage the Fund.
He emphasised that this Board is being proposed as part of efforts to distance the management of the fund from ministerial influence. In the existing Act, the Finance Minister is vested with significant authority to manage the Fund and spend the revenues accumulated.
It has been proposed that the directors shall be selected from among persons who have “wide experience and ability in legal, financial, business or administrative matters.” One Director shall be nominated by the National Assembly and another from the private sector.
As per the proposed amendments, there will also be an Investment Committee that will advise the Board of Directors on the Investment Mandate.
This Committee comprises members a nominee of the subject Minister, a nominee of the Minister responsible for the administration of the petroleum sector, a nominee of the Attorney- General, a nominee of the Leader of the Opposition, a nominee of the private sector and two other non-voting members.
