As the Budget debates continue at the Arthur Chung Conference Centre (ACCC), Natural Resources Minister Vickram Bharrat has defended Government’s withdrawal of $126.7 billion from the oil fund to partially finance this year’s fiscal plans, saying that the money would be injected into Guyana’s tradition sectors.
The $552.9B Budget caters for the commencement of some of the People’s Progressive Party/Civic (PPP/C) Government’s major projects, including the Gas-to-Shore project, the New Demerara River Bridge, and the Amaila Falls Hydro Project among others.
Minister Bharrat argued that the money withdrawn from the Natural Resource Fund would be used to incentivise these and other non-oil sectors.
“If you examine the Budget, Mr Speaker, you will see that the money from the Natural Resource Fund is flowing into those sectors. It is flowing into agriculture, it is flowing into health, it is flowing into education, it is flowing into tourism and manufacturing, it is flowing into our security. That is what it is being used for.
“So, when they come to the National Assembly and say, ‘The PPP is wasting the oil money, and there is no evidence of how the oil money will be spent’, Mr Speaker, we are saying to the people of Guyana: ‘That is how the money will be spent in 2022; on education, on health, on agriculture, on tourism, on security, on training our young people and building back the sugar industry. That is where the money will be spent, because the majority of our Guyanese are employed in those sectors, and not in the oil and gas sector, and that is why we are committed, as a Government, to ensure we grow the non-oil sector,” Bharrat posited.
Moreover, the Natural Resource Minister contended that it was for this reason that the Government forged ahead with the historic Local Content legislation, which stipulates provisions for Guyanese and locally-owned businesses in non-oil sectors and services to benefit exclusively and at specified percentages from the petroleum industry.
His remark was in response to commentary from some APNU+AFC Members, who claim that Budget 2022 is killing the non-oil sectors.
In fact, Opposition Member of Parliament David Patterson on Thursday bashed the Government for using up all the oil funds.
“Mr Speaker, emptying the full amount of savings from the Natural Resource Fund is beyond reckless; a hill-billy type disregard for our country’s economic stability,” Patterson pointed out.
But according to Minister Bharrat, the Opposition would get the opportunity to scrutinise how the Government would be spending the oil funds next week, when the National Assembly would commence the Consideration of the Estimates of Revenue and Expenditure for the 2022 fiscal year.
“This big hullabaloo, Mr Speaker, about the scrutiny of the oil money, that is what we are doing here. We are scrutinising how that money will be spent; and next week the Opposition will be given the opportunity to ask questions…and to scrutinise the Budget and how oil money will be spent and who it will be spent on… We made a pledge when we were campaigning that we will ensure there is transparency and accountability, and that when the money is used, it will be used to benefit every single Guyanese,” Minister Bharrat stressed.
With Government using the entire US$607.6 million from the Natural Resource Fund that was received over the past two years since Guyana started producing oil, the country is set to earn another whopping US$957.6 million from the oil and gas sector this year alone.
Senior Minister in the Office of the President with responsibility for Finance, Dr Ashni Singh, had explained during his budget presentation that this year’s projected earnings will comprise of some US$857.1 million from the Government lifts of profit oil, and an additional US$100.5 million from royalties.
This significant increase will be fuelled by the operationalisation of the Unity floating, production, storage, offloading (FPSO) vessel which is slated to start production in a matter of weeks. With two FPSOs in operation, it is anticipated that there would be 94 lifts from the Stabroek Block this year, 13 of which would be Government lifts.
Since oil production commenced in December 2019, Guyana has earned US$607.6 million from its share of nine oil lifts and from royalty payments at the Liza 1 Field in the oil rich Stabroek Block.
Dr Singh had explained that Government has injected the entire $126.7 billion from the oil fund into Budget 2022 to ensure the accelerated development agenda, critical investments, and the various measures are financed without excessive borrowing or the introduction of any new taxes.
This proposed withdrawal is being done in accordance with provisions catered for in the recently-passed NRF Act, which was heavily objected to by the APNU+AFC Opposition.
