Opposition’s claim that interest from oil fund could give higher salary increases false – Jagdeo

Vice President, Dr Bharrat Jagdeo on Thursday rejected claims from the political opposition that using interest earned from the Natural Resource Fund (NRF) would be able to offer public servants higher salary increases than what was offered by the incumbent People’s Progressive Party Civic.

Elson Low, Economic Advisor to the Leader of the Opposition Aubrey Norton claimed at a press conference on Thursday, insisting that the interest from the NRF could cover the cost of an increase higher than the 6.5 per cent afforded to public servants in 2023.

Jagdeo said this type of reasoning was wild rhetoric, pointing out that the interest on the NRF would only give you $2.7 billion when the increases cost the government much more.

“So, how much money was in the NRF in 2022 before the transfer for 2023? There was about US$270 million. Now, this year another sum would have been added to that.

“On average, interest of about 5 per cent. So, if you invest that US$270 million, you would get just over US$13 million in interest, which is about $2.7 billion,” Dr Jagdeo explained.

He said the monies in the NRF are being invested in safe instruments, which in this instance are secure bonds that earn interest; this aspect is managed by the Central Bank of Guyana which is mandated to manage the NRF.

Dr Jagdeo added that even with the total receipts in the Fund, interest earned would still not be able to meet the total amount required to pay public servants.

According to the VP, the 6.5 per cent salary increase that the government implemented costs $7.9 billion.

He reminded that the opposition’s approach to policy led Guyana on a downward spiral in the past.

“They don’t know the purpose of an NRF. It’s not to take every cent you earn on interest. We have, in the restructuring of the NRF, removed any direct charges on the NRF because that could lead to corruption.

“All expenditures from oil money must go through Parliament, must be debated in Parliament, and appropriated in Parliament. You can’t spend off book as would have been allowed under the old NRF, the APNU Natural Resources Fund Act that they passed,” he added.

Dr Jagdeo continued, “That is the philosophical underpinning of the APNU. Why do you think this country ended up with paying every cent of tax dollars we collected to service debt? It’s because of the same philosophy in past PNC governments, they spent what we didn’t have and a whole generation, all of us here suffered because of that, from lost opportunities.

“We had to pay back, get some written off, etc. but every cent we paid back in debt that was wasted or unwarranted, we lost an opportunity for development, either better health care or education for our people,” the Vice President told a news conference.

In 2021, the government amended the NRF Act to bring greater transparency and accountability in the management of Guyana’s oil resources, including the requirement of the government to seek annual Parliamentary approval for withdrawals from the NRF as stated in Section 19 of the NRF Act 2021.

Under that provision, as part of its consideration of the Budget Process, the Parliament approved US$1.002 billion (equivalent to G$208.9 billion) to be withdrawn from the NRF in 2023.

Per the NRF Act 2021 and the approved Budget 2023, the government made its eighth and final transfer, totalling US$152.1 million (equivalent to G$31.6 billion) from the NRF on December 27, 2023, to the Consolidated Fund.

This transfer brings the accumulated withdrawals for 2023 to US$1.002 billion (equivalent to G$208.4 billion), in line with the total of US$1.002 billion (equivalent to G$208.9 billion) approved to be withdrawn in 2023.