PURSUANT to the Natural Resource Fund (NRF) Act, all withdrawals from the NRF to finance the national budget are subject to approval by the National Assembly.

Once the budget is approved, only then the withdrawal can be effected, and this is done not all at once, but throughout the fiscal year in various sums. Additionally, all withdrawals from the NRF shall be deposited into the Consolidated Fund in accordance with the NRF Act.

The national development priorities of the country are not state secrets. Broadly speaking, the development priorities are: the energy sector, aimed at reducing energy costs and delivering reliable a supply of energy, infrastructural development, housing, education, health, and the “green economy” within the framework of the Low Carbon Development Strategy, just to name a few and for context.

With this in mind, it can be easily deduced from the national budget speech and estimates, the projects, and other areas in line with the national development priorities, that the NRF withdrawals will be used to finance

INTRODUCTION
The question of specificity regarding the expenditure of the withdrawals from the Natural Resource Fund (NRF) has surfaced in certain sections of the media. Additionally, concerns with regard to the investment mandate of the fund has also emerged.

Discussions surrounding these aspects of the NRF have been gaining critical attention, and they are not unreasonable questions to ask. This article, therefore, seeks to contribute to the discussion by attempting to provide answers to these questions.

WITHDRAWALS FROM THE FUND
Pursuant to the NRF Act, all withdrawals from the NRF to finance the national budget are subject to approval by the National Assembly.

Once the budget is approved, only then the withdrawal can be effected, and this is done not all at once, but throughout the fiscal year in various sums. Additionally, all withdrawals from the NRF shall be deposited into the Consolidated Fund (CF) in accordance with the NRF Act.

According to the withdrawal rules (first Schedule), the ceiling on annual withdrawals are as follows:
1. 100 per cent of the first US$500 million
2. 75 per cent of the second US$500 million
3. 50 per cent of the third US$500 million
4. 25 per cent of the fourth US$500 million
5. Five per cent of the fifth US$500 million
6. Three per cent of any amounts in excess of US$2.5 billion.

With this simplified formula, one can observe that the withdrawal rule of the fund is not calibrated to withdraw all of the monies from the NRF, especially as the balance in the fund starts to grow.

The upfront drawdown from the fund is necessary to accelerate Guyana’s massive development agenda in infrastructure (new roads and bridges, social infrastructure, health care, education, national security, and ICT etc…), all aimed to modernise and transform the economy and diversify the economy.

As illustrated in the chart, the 2023 national budget is financed from various sources as stated hereunder:
(1) Tax revenue accounting for 41 per cent or $321.1 billion,
(2) Non-tax revenue accounting for two per cent or $15.2 billion,
(3) Carbon credit inflow accounting for four per cent or $31.28 billion,
(4) NRF withdrawals accounting for 27 per cent or $208.9 billion, and
(5) Debt financing accounting for 26 per cent or $206.5 billion.

The NRF Act establishes that withdrawals from the NRF shall be used to finance the following:-
a) National development priorities including any initiative aimed at realising an inclusive green economy; and
b) Essential projects that are directly related to ameliorating the effects of a major natural disaster.

The national development priorities of the country are not state secrets. Broadly speaking, the development priorities are: the energy sector aimed at reducing energy cost and delivering a reliable supply of energy, infrastructural development, housing, education, health and the green economy within the framework of the Low Carbon Development Strategy (LCDS), just to name a few and for context.

With this in mind, it can be easily deduced from the national budget speech and estimates, the projects, and other areas in line with the national development priorities, that the NRF withdrawals will be used to finance. This is demonstrated in the table.

As established previously, the NRF withdrawal represents 27 per cent of the total budget (2023), amounting to $208.9 billion. The selected projects in the above table amounted to $241.9 billion, or 115.8 per cent of the NRF withdrawal.

The gas-to-energy project, which is a major national development priority, the sum of $43.3 billion is budgeted for same, representing 20.7 per cent of the NRF withdrawal; the budgeted sum for roads and bridges represents 44.5 per cent of the NRF withdrawal, the capital budget for education, housing and the health sector represents 8.4 per cent, 26.1 per cent and 12 per cent respectively, of the NRF withdrawal.

INVESTMENT
Part V of the NRF Act, sections 22–27 establishes the eligible investment, the minimum investment in very safe investments, and investment for long-term savings, passive investment management, and the investment mandate of the fund.

Investment of fund applies to the balance net of withdrawals to finance the national budget. To this end, the Bank of Guyana which is vested with the operational management authority for the NRF, publishes monthly, quarterly, and annual reports.

CONCLUDING REMARKS
The national development priorities of the country are clearly outlined by the government, in its manifesto, the LCDS, budget presentations, policy positions, and demonstrated through the types of policies being pursued within the broad framework of its development agenda.

The withdrawals from the NRF can be clearly aligned with these priority areas identified in the national budget.