–Kamla Persad-Bissessar warns against using SWF as a ‘cash-cow’

AS the debate rages here over the proposed Sovereign Wealth Fund (SWF) and how the monies should best be used, the former Prime Minister of Trinidad and Tobago practically settled the matter Thursday evening with just a few choice words.

Invited here by the Guyana Manufacturing and Services Association (GMSA) to speak on the subject, ‘Managing oil and gas revenues: Experiences and lessons learned from Trinidad and Tobago’, Ms Kamla Persad-Bissessar said when the subject of the SWF came up that it would not be advisable to use it to supplement recurring expenditure as has been happening of late in her native T&T.

“Your SWF is an insurance policy; it is not, nor should it be seen as a ‘cash cow’ to be raided,” she said.
“This would defeat the entire purpose of such a fund, and indeed raiding the fund to supplement the annual Treasury expenditure has the potential to significantly destabilise the national economy,” she told the packed-to-capacity audience assembled at the Pegasus Hotel for the GMSA’s annual Awards and Dinner.

She also had a word of caution about pricing, noting that it is a highly complex and controversial issue, and as such must be foremost in the minds of legislators and negotiators, as one does not often have the opportunity to return to the bargaining table when the ink dries on contracts.

“The heart of these negotiations must always be that the people of Guyana are getting the best deal for their patrimony; the oil and gas from their lands,” the current Leader of the Trinidad & Tobago Opposition said, adding:
“I am aware that consideration is being given to the establishment of a Sovereign Wealth Fund (SWF) similar to what we in Trinidad and Tobago know as the Heritage and Stabilisation Fund (HSF).”

Noting that mechanisms such as the SWF can act as a buffer, given the volatile pricing and political issues involved in the hydrocarbon industry, Ms Persad-Bissessar, who served as Prime Minister from May 26, 2010 to September 7, 2015, went on to explain that there are many economic tools that can be used to channel resources into it, among them Petroleum Production Taxes and Supplemental Petroleum Taxes.

She also said that a petroleum import clause for increased scales of taxation for supernormal finds may be worthy of consideration as an adjunct strategy to enable equity in profit sharing across the board and sustainability during low-price periods.

NATIONAL POLICY
On the subject of policymaking, she said:
“I recommend a national policy for the development of Guyana; one that includes contributions from the Government, the Opposition, Labour, Civil Society and the business community.”

Underscoring that in T&T, although attempts at this process have been made with policies such as Vision 2020 and now Vision 2030, Persad-Bissessar said these are not inclusive, and have been shown to be biased in favour of a particular political ideology.

Contending that imbalanced policies do not benefit the people of a country, she went on to say:
“The sale and production of resources must be able to not just move the GDP rankings, but have a tangible effect on the daily life of every single citizen in the country.”

Suggesting further that leaders will need to make bold and brave decisions to move industries forward, whilst at all times ensuring that the social safety net covers the most vulnerable in society, she said the task at hand also requires vision and agility in navigating the perils of volatile pricing and resource availability.

On that score, she said, it is imperative that legislative framework be enacted, and that such legislation is robust enough to protect the country’s patrimony whilst at the same time not driving away investors with endless bureaucracy.

“Such a framework is essential for ensuring that multi-nationals contribute adequately to the development of Guyana even as they invest and benefit,” she said, adding that at the same time, one needs to be mindful that diplomatic relations with other countries and agencies are fair and firm, whist ensuring that that Guyana gets the best deal possible.