Jagdeo rubbishes claim that NRF interest revenues could fund higher salary increases

The content originally appeared on: INews Guyana
Vice President Dr Bharrat Jagdeo

Vice President, Dr Bharrat Jagdeo has debunked the opposition contention that an APNU-AFC government would be able to grant citizens higher salary increases using interest earned from the Natural Resource Fund (NRF).

This argument for using interest earned from the NRF was made at an opposition press conference (on Thursday) when the opposition economic advisor contended that the interest on the Natural Resources Fund could cover the cost of an increase higher than the 6.5 per cent afforded to public servants in 2023.

“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 and the money is invested in safe instruments and [that] gets, 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 GY$2.7 billion,” Dr Jagdeo explained at a press conference at the Office of the President on Thursday.

Safe instruments 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 GY$ 7.9 billion.

“The interest on the NRF would only give you GY$2.7 billion. Yet, [opposition member indicated] today that they would fund a higher increase from the interest alone on the NRF. This is the sort of policy we can expect from APNU AFC, just wild rhetoric,” Dr Jagdeo said.

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

“They [the opposition] 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,”

In 2021, the government amended the Natural Resource Fund (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. [DPI]