THE CARIBBEAN COURT OF JUSTICE Port of Spain, Trinidad.
MEDIA RELEASE  No. [22:2019] [18 June 2019]
CCJ AFFIRMS NO-CONFIDENCE RULING
The CCJ ruled on a trio of cases related to the motion of no confidence made in the National Assembly of Guyana on 21 December 2018. In the judgment delivered today, the CCJ declared that the motion of no confidence in the Government is valid. Guyana’s Constitution states that the Cabinet, including the President, is required to resign if the Government is defeated by the majority vote of all the elected members of the National Assembly “on a vote of confidence”.
In December 2018, the Leader of the Opposition had moved “a motion of no confidence” in the Government. Mr. Charandas Persaud, a member of the Government, had joined the 32 Opposition members in voting for the motion so that 33 members voted in favour of the motion and 32 voted against. Another provision of the Constitution required elections to be held within three months of the defeat of the Government on a motion of confidence, unless two-thirds of the National Assembly determined a longer period before the holding of elections. Despite the Speaker of the Assembly declaring that the motion had been validly passed, the Government neither resigned nor announced impending elections. This triggered a number of legal challenges in the courts in Guyana, which ultimately led to two days of hearings at the CCJ in May 2019.
There were three main issues before the Court. The first issue related to the number of votes needed to pass a vote of no-confidence. The CCJ decided that the requirement for “a majority of all the elected members of the National Assembly”, referred to a majority of the total number of votes or seats in the Assembly, irrespective of the number of members who actually vote. In determining that majority, the Court was of the opinion that the ‘half plus one’ rule was not applicable. The Court stated that the majority was clearly at least 33 votes.
The second issue was whether Mr Persaud was ineligible to vote as he was a dual citizen. Dual citizens are not allowed to put themselves up for candidacy in elections to the National Assembly. The Court found that the National Assembly (Validity of Elections) Act required that a petition alleging that Mr Persaud was disqualified from running for office would have had to be filed in the High Court of Guyana within 28 days after the publication of the results of the 2015 election. Since this case was filed in January 2019, the Court held that the challenge to Mr Persaud’s election to the Assembly had been out of time.
The Court also rejected the submission that Mr Persaud was absolutely required to vote against the motion of no confidence along with other members of the Government.
Another issue hinged on the differences between a ‘motion of no confidence’ and ‘a motion of confidence’. It was argued that the provisions in the Constitution only applied to ‘motions of confidence’ which could only be raised by a member of the Government. The Court however held that the reference to ‘a vote of confidence’ in the Constitution included ‘a motion of no confidence’ which could be raised by any member of the Assembly, including the Leader of the Opposition.
The main judgment was delivered by the President of the Court, the Hon. Mr. Justice Saunders, with concurring judgments by the Hon. Messrs. Justice Wit and Anderson and the Hon. Mme. Justice Rajnauth-Lee. The bench also included the Hon. Mr. Justice Hayton.
Mr Justice Wit said that while the Constitution contained provisions that prevented members from ‘crossing the floor’ and gave the representative of each both the Government and the Opposition the power to recall and replace a member. Those provisions could not, and were not, meant to prevent members from so voting.
Mr. Justice Anderson said that there may be need for drafters to revisit the language of ‘confidence motions’ provisions in the Constitution to bring about more clarity. He also said that while challenges to disqualifications for elections were generally barred after 28 days after the election, in his opinion, there may be cases such as fraud where the Court would have jurisdiction to hear the matter.
Mme. Justice Rajnauth-Lee in her judgment stated that “there was nothing which prevented Mr Persaud from voting in favour of the no confidence motion” and she urged all to bear in mind that the rule of law was an important guiding constitutional principle of a sovereign democratic state like Guyana.
In the coming days, the Court will hear further arguments from the parties on the consequences that should flow from the validity of the motion of no confidence. The full judgment of the Court, along with a judgment summary, is available on the Court’s website at www.ccj.org

Americas Regional Ministerial Conference on Green Economy

THE International Solar Alliance (ISA) applauded Guyana for significant strides in generating solar power in its quest of becoming a ‘Green State’.
Seven years after installing its first eight kilowatts demonstration solar power system, Guyana now has photovoltaic systems totalling five megawatts of solar power. It is preparing to commission its first solar farm. C E O of the Guyana Energy Agency (GEA), Dr. Mahender Sharma said approximately six more solar farms are in the pipeline. He shared a panel discussion on the Green Economy with Fernando Branger, Senior Executive (Energy Projects) of CAF Development Bank of Latin America and Fiona Bourne, ISA Director of Governance, Resources and Innovation in Fortaleza, Brazil.

Following the journey of Guyana in adopting solar energy, Bourne said progress is “very impressive and commendable.” Addressing the topic of ‘Solar Investment: Transition to a Green Economy,’ Sharma outlined progress in transitioning to solar energy and its near-term developmental plans. Since its first pilot project in 2012 “huge accomplishments” in photovoltaic systems installed on government buildings total almost five megawatts.The country will commission its first 400KW Solar Farm in Mabaruma, Region One (Barima-Waini). The farm is a hybrid system, switching to batteries and then a generator in the absence of the sun. The aim is to produce 80 megawatts of solar power.

After Guyana became a member of the International Solar Alliance in January 2018, ISA and the Government of India assisted in drafting a Solar Roadmap which outlines how the country will generate a total of 80 megawatts of solar energy. With a population of approximately 750,000 people, the peak demand on the national grid is approximately 115 megawatts of electricity.

He told leaders of Latin America and Caribbean, ” 80 megawatts of solar is huge in that context. 80 megawatts are broken down by solar panels that are connected to the grid and solar panels that are off grid. So the 80 megawatts comprise 30 megawatts of on-grid solar and 50 megawatts of off-grid.” The off-grid demand is higher as a number of communities are located far from the national grid, making it uneconomical to connect via transmission lines. For far-flung communities isolated home systems or mini grids are more feasible.

The Solar Roadmap was transformed into a proposal submitted to ISA. Government is also pursuing a Line of Credit with the Government of India for the conduct of a feasibility study and the possible financing of some of its solar energy projects.

ISA provides a global platform for cooperation among countries to help achieve the common goal of increasing the use of solar energy in a safe, convenient, affordable, equitable and sustainable matter. Guyana can benefit significantly from ISA’s Demand Aggregation and Pipeline Programme. Through this programme, ISA intends to significantly drive down prices by aggregating 1000 MW demand for mini-grids and rooftop solar across member countries.

Guyana received funds from the Inter-American Development Bank (IDB) for the development of three solar farms – 1.5 megawatts, 1 megawatt and .6 megawatts.“By mid-2020, towards the end of 2020, we should have installations commencing on the ground,” he said. Farms should be operational by 2021.

In January 2019, Abu Dhabi Fund for Development (ADFD), through the International Renewable Energy Agency (IRENA), approved a US$8M loan for Guyana to install 5.2 megawatts grid-connected solar PV systems. These systems will spread across three solar farms in the hinterland regions. This initiative is intended to reduce residents’ dependency on fossil fuel and increase reliability of electricity supply in the hinterland. “So it is likely that we will sign a future agreement to finance an additional three solar farms, largely for our mini grids in the hinterland and remote areas of the country,” he said.

GEA is hopes to tap into the US$80M made available by the Government of Norway through the REDD+ Financial Scheme. It is hoping to use a percentage of the US$80M to set up its on-grid solar system.

The country’s shift towards solar power is aligned with its ‘Green State Development Strategy (GSDS):Vision2040’ and its ‘Green Economy Plan’.

NORWAY approves $16Billion for solar photovoltaic farms

Norway approved the transfer of $16 Billion through its Climate Mitigating Ministry, to finance construction of 30 megawatts of solar photovoltaic farms with storage , a significant boost for Guyana Power and Light Incorporated (GPL). In July 2018, Norway Forest Agreement unlocked billions of dollars. Following fruitful talks in Oslo on its 2025 energy-mix proposal, the deforestation rate of 0.05 – one of the lowest -and the focus on sustainable development, Guyana would direct $27 Billion towards intensified efforts to achieving 100 per cent renewable energy use. This includes construction of solar farms totalling 100 megawatts in Bartica, Lethem, Mabaruma, Mahdia and several interior locations.

A new Board of the Guyana Power and Light Inc (GPL) was tasked with finding innovative solutions to the issues affecting the power company, with the new chair vowing to end blackouts, a scourge for decades and rectify the systems at the company and loss of jobs and investments. Extensive power outages affected the country consistently over recent weeks. Electricity costs exceed the regional average and customers demand more reliability. For micro-business the biggest challenge is blackout. Fiscal information caused concern. Between 2008 and 2017 GPL moved from bad to worse as efficiency declined by about $20B. Board and management include CEO of the Guyana Energy Agency, M. Sharma and Representative of the Private Sector, K. Ramnauth. The team at a time of crisis is supported by the government in sourcing the investment. The transmission, distribution and generation utility hundreds of employees and has a social responsibility.

UNITED ARAB EMIRATES

Funding will be used to transform the island of Wakenaam into one of the country’s first, “truly green off grid centres”.

Extractive Industries Transparency Initiative

The Minister of Natural Resources led a delegation which included National Director of Guyana-Extractive Industries Transparency Initiative (GY-EITI) Dr Rudy Jadoopat at the EITI 2019 Global Conference in, France under the theme ‘Open Data, Build Trust’. Guyana was lauded for progress since 2016 and invited to be a member of a global network on contract transparency.

The conference aimed to reinforce the importance of multi-stakeholder dialogue and openness in addressing challenges, provide an opportunity to discuss emerging trends and best practices in the good governance of natural resources and examine the role of the EITI in the good management of the extractive sector, among others.

The delegation showcased progress towards EITI implementation at a country booth and a pitch session, sharing highlights from its first EITI report and took questions. They had opportunities to network with regional and international representatives.

At an Executive Session themed ‘Opening Contracts 2021 – Ensuring a Good Deal’, the minister noted underlying challenges of contract disclosure and shared Guyana’s experience. Speakers included the Tanzania Minister of Mines, representatives from Indonesia, the Philippines, Total and Publish What You Pay.

Government resisted publication of the Production Sharing Agreement with ExxonMobil subsidiary, EEPGL in 2016 until the end of 2017. The agreement confirmed a secret signing bonus.

Government was initially resistant to public disclosure of petroleum contracts due to security and sovereignty concerns. The decision to do so was in the overall best interest of the state and populace.

The minister emphasised commitment of the government to open and better governance and the continued quest to ensure that the tenets and principles of the EITI are firmly rooted in Guyana before ‘first oil’ in 2020.

Guyana’s objective of pursuing an accelerated procedure for acceding to the EITI standard was affirmed in November 2016 following discovery of petroleum. Progress continued with the formation of the MSG, acceptance of an application for formal membership and completion of the 1st report for fiscal year 2017.

The Government remains committed to promoting transparency in the natural resources sector for the benefit of all Guyanese and to supporting initiatives that build the capacity of stakeholders.

Guyana’s Pending Oil Boom – or Bust
World Politics Review

After years of impoverishment, Guyana is suddenly on the verge of prosperity. Since 2015, a consortium led by ExxonMobil developed 13 deepwater oil wells offshore, with a combined productive capacity of around 750,000 barrels per day. Exploration is ongoing, with most experts anticipating the country’s oil reserves will exceed the current estimate of 5 billion barrels. One way to grasp the magnitude of these discoveries is that in 10 years, Guyana, with a population under 800,000, could pump nearly a barrel of oil per person daily—more production on a per capita basis than Saudi Arabia today.

Still, there are unrealistic expectations, like the prediction of the minister of natural resources that, thanks to an oil-backed sovereign wealth fund in the works, “Each Guyanese is going to be a US-dollar millionaire, or worth that, in a few years.” Of course, the spectrum of disasters linked to sudden oil windfalls, from Angola and Nigeria to Venezuela, suggests otherwise. The oil curse hangs over Guyana, with risks of inflation, corruption and inequality, among other things. Aware of these traps, the government has not saddled itself with excessive borrowing ahead of the surge in petrodollars.
Yet disputes over management of this budding oil industry spill into politics, with a vote of no confidence in President Granger on December 21, driven by a backlash over how government handled oil contracts. “They sold our patrimony” to ExxonMobil, opposition leader Bharrat Jagdeo of the People’s Progressive Party said. Charrandas Persaud, a lawmaker in the Alliance for Change, deserted the ruling coalition and cast the deciding vote supporting the NCV. Coalition members shouted at him to change his vote and he was escorted out of the building by police. Fearing for his life, denying government charges that he was bribed $1 million, he fled to Canada where he is a citizen. The government challenged the NCV on the grounds that he was ineligible to serve in parliament because of his Canadian citizenship.

The vote triggered new elections within three months. Guyana’s High Court ruled that the NC motion was valid with a simple majority of 1 and general elections must be held by March, unless parliament votes to extend the government, which is unlikely. The Caribbean Court of Justice in Trinidad resolved the legal challenge, supporting the High Court. The government lost but delay after the March election deadline increases political uncertainty.

In July 2018 the government announced the key appointment of the head of the Department of Energy. It was hoped discovery of oil would rescue one of South America’s poorest countries. Now fears grow about economic dislocations of the oil boom and its corrosive effects on the political and social fabric of a country with a history of violent racial divisions. There are good reasons for concern. Membership in political parties is along ethnic lines, a legacy of colonial history. Urban Africans dominate the People’s National Congress, seizing power in fraudulent elections 1964-1992 to established a one-party state under its first leader. It is a key member of the Partnership for Unity coalition with a majority of 1, led by the ailing Granger on becoming president in 2015. The rural Indo-Caucasian People’s Progressive Party, PPP, ruled from 1992 to 2015. Elected parties have an advantage in perpetuating their stay in office. The party in power when oil revenues start flowing is likely to expand its patronage network to do just that. That is why oil has raised the political stakes. Well before the NCV, the opposition questioned agreements between the government and ExxonMobil seen as favourable to the IOC and demanded transparency. A US$18 million signing bonus was channelled to officials although Exxon Mobil claimed the payment was standard industry practice “in many petroleum agreements.” The production sharing agreement entitles Guyana to a 2 per cent royalty on gross earnings, with the crude volume evenly split, after ExxonMobil recoups operational costs from oil sales, capped at 75 per cent of total monthly production. The IMF considers the deal generous to Exxon Mobil and advised negotiating a higher share of crude proceeds and a more progressive tax regime in future agreements.

Government published a “green paper” to advance discussion on managing the windfall and built management and oversight mechanisms to deal with its commercial oil sector partners. A natural resources sovereign wealth fund and other positive measures will strengthen institutions. However, the green paper proposed appointment of the sovereign investment committee by the finance minister, potentially limiting its autonomy. Such an arrangement fails to alter the perception of ethnic favouritism in decisions on public jobs and investment, social programs and state contracts.

With oil revenues still several years out, three scenarios unfold. The greatest danger is escalation of current political turmoil to the point of sectarian tension between Asian and African communities if oil revenues support patronage networks rather than the national interest.

If the Asian-Caucasian majority returns a PPP government to power, volatile Africans may feel the coalition lost unfairly and the democratic system did not protect their interests. As in 1963, disillusionment may lead to communal violence, government paralysis and expanded criminality and corruption.

Despite the gloom, there is time for a better scenario, in which oil is used to solve problems, rather than stoke old disputes. Granger and Jagdeo recently promised elections soon. “We don’t want … a constitutional crisis. The president … doesn’t want Guyana to be seen as a failed state,” Jagdeo said as the oil industry embarks on a , complex global project, surrounded by poor governance in Venezuela and Caricom.

With a GDP size of $3.63 billion (2018 Rank: 160), a growth rate of 4.1% in 2018 and 4.6% in 2019, the economy is expected to grow by 33.5% and 22.9% in 2020 and 2021 respectively. NASDAQ reported that with per-capita income of $5,194, Guyana is a middle-income country with an abundance of resources. ExxonMobil discoveries will lift income when oil production begins . Exxon is expected to start producing up to 120,000 barrels of oil per day from the Liza Phase 1 development next year and the country is projected to be among the world’s largest per-capita oil producers by 2025. The International Monetary Fund praised Guyana for its economic growth and stability over the past few years.

Edited report by Robert Looney, professor at the Naval Postgraduate School in Monterey, California.

Ensuring petroleum resources are a blessing

Whether natural resources of a country will be a blessing or a curse, depends on various factors. Oil discoveries of Guyana can induce an appreciation of the real exchange rate, de-industrialisation and poor growth prospects and these adverse effects are more severe in a volatile economy with weak institutions and rule of law, corruption, presidential democracies and underdeveloped financial systems. A resource boom often reinforces rent grabbing and civil conflict especially if institutions are frail, induces corruption and maintains effete policies.

For a resource rich economy , fiscal and legal governance frameworks must ensure that the economy can successfully convert depleting exhaustible resources into other productive assets. Hence, welfare-based fiscal rules will harness the resource windfall. Guyana must develop opportunities from which petroleum resources will stimulate economic growth and development and thus overcome the challenge of ensuring that natural resource wealth leads to sustained economic growth and development.

Empirical evidence suggests that countries with a large share of primary exports in Gross National Product (GNP) have low growth records and high inequality, especially if quality of institutions, rule of law and corruption are bad (van der Ploeg 2011). This potential curse is particularly severe for point-source resources such as minerals and precious metals but the resource curse not cast in stone. Nevertheless, a resource rich country like Guyana, must ensure that it develops better institutions, opens more trade channels and increases investments in exploration technology. This could allow the economy to enjoy the fruits of its natural resources wealth. In this field of dreams, challenges are worth overcoming due to the potential to open up a major new Caribbean exploration area.

LEGISLATION

Guyana has gaps in various departments preparing for first oil in the first quarter of 2020.

It is still unclear whether it has the capacity to deal with the Oil and Gas Industry which brings contracts and complex agreements. If not properly analyzed and understood, it could be chaotic. To facilitate this, laws need to be updated and acts and policies put in place to deal with the activity.
Four years have passed since the discovery of oil offshore. Guyana is nowhere near fixing these cracks and crevices and it is unclear if it can be done in the few months left.

Former Minister of Legal Affairs and Attorney General Anil Nandlall said, “The Coalition Government has not passed a single piece of legislation of worth to prepare the legal infrastructure for a new, complex and multi-billion-dollar sector of a magnitude never seen before in Guyana. Yet, there is absolutely no legal framework in place, or likely to be in place in the near future to regulate the sector”.

He is not discussing ancillary legislation but the very basic framework, which is not in place as there is no authority comprising suitably qualified and technically sound persons to manage or administer the affairs of the sector.
There is no legislation installing monitoring mechanisms to ensure the sector’s operations meet with international standards and guidelines, neither is there any legislative measure protecting the local and domestic sectors, preventing local labour being ostracized, or dominated, or exploited by powerful foreign conglomerates, who will preponderate.
No laws protect the environment from significant hazards, which inhere to this sector. Neither are there laws requiring insurance and indemnification, in relation to loss and damage, which may arise, indirectly or directly, from the sector.

“In short, we are absolutely legally unprepared for the sector.”
Regarding progress in preparing the legal system for the sector, the current Attorney General demonstrated a high level of incompetence in treating the most elementary legal matters. Any confidence placed in him to produce the required menu of legal measures and legislative requisites for this sector would be absolutely misplaced.“It is simply beyond his competence and indeed, most lawyers’ competence in the country to do so.”

The oil companies expected to operate in this sector have decades of international legal experience operating in various parts of the world. The experience they have accumulated is immeasurable. They have, advising them, a constellation of lawyers, highly specialized in various aspects of the sector. Guyana simply does not have that caliber of skills available locally and therefore, will have to consider importing appropriately qualified persons to protect their interests. At the same time they are employing those the country has, more importantly immediately invest in training a local group of lawyers.
When this major sector and its spinoffs start to function at optimal capacities, definitely the legal system will have to be augmented and expanded to meet the demands which will flow . Guyana is completely unprepared [legally] for the gigantic impact that will be generated from this sector.

IMF

2019 Preliminary Findings of IMF Staff at the End of an Official Visit to Guyana
Submitted by Pamela Snow on Wed, 06/19/2019 – 07:16

“A Staff team from the International Monetary Fund (IMF), led by Mr. Arnold McIntyre, visited Georgetown during June 3–14 to hold discussions for the 2019 Article IV Consultation. The team met with Prime Minister Moses Nagamootoo, Finance Minister Winston Jordan, Minister of Legal Affairs and Attorney General Basil Williams, Central Bank Governor Gobind Ganga, other senior officials, representatives from the private sector, banks, the opposition party, labor unions, and other stakeholders.”

Notable points:

• Economic growth strengthened in 2018 with broad-based expansion across all major sectors. Real GDP grew by 4.1 percent in 2018, up from 2.1 percent in 2017
• Weaker export performance and higher imports driven by high value imports related to oil production contributed to a weaker current account balance. In 2018, the current account deficit rose to 17.5 percent of GDP, from 6.8 percent in 2017.
• Public finances improved in 2018. The central government’s deficit was 3.5 percent of GDP, lower than the budgeted 5.4 percent of GDP.
• Guyana’s medium-term prospects are very favorable.
• The mission supports continued efforts by the authorities to strengthen institutional, governance and management practices, which will also help reduce vulnerability to corruption.
• The mission encourages building on recent progress in strengthening transparency and governance.
• The authorities have indicated their concerns that the absence of a ring-fencing arrangement in the Stabroek Production Sharing Agreement could potentially affect the projected flow of government oil revenues.
• The mission recommends that the authorities continually reassess the monetary policy stance to reflect changes in macroeconomic outlook or risks surrounding the outlook .
• The financial sector remains stable.
• Commendable progress has been made in strengthening the framework for anti-money laundering and counter terrorism financing, based on the 2017 national risk assessment. Guyana has been officially removed from the European Commission’s Money-Laundering Blacklist in February 2019
• Structural reforms are needed to support economic diversification, and achieve inclusive and equitable growth . Infrastructure bottlenecks, skilled labor shortages, and weaknesses in electricity supply are major obstacles to growth.

Official IMF Statement

Economic growth strengthened in 2018 with broad-based expansion across all major sectors. Real GDP grew by 4.1 percent in 2018, up from 2.1 percent in 2017, led by construction and services sectors. Inflation remained steady at 1.6 percent at end-2018, on the back of stable food prices and exchange rate. For 2019, the mission projects real economic growth of 4.4 percent, driven by continued strength in the construction and services sectors ahead of oil production in 2020, and strong recovery in mining. The authorities do not foresee any significant spillovers from the crisis in Venezuela at present. However, the influx of migrants into the hinterland and rural areas could put socio-economic pressures on the local communities.

Weaker export performance and higher imports driven by high value imports related to oil production contributed to a weaker current account balance. In 2018, the current account deficit rose to 17.5 percent of GDP, from 6.8 percent in 2017. The deficit was largely financed by FDI related to the petroleum sector. Reserves stood at US$528 million in December 2018.

Public finances improved in 2018. The central government’s deficit was 3.5 percent of GDP, lower than the budgeted 5.4 percent of GDP. The better-than-expected outturn was largely supported by stronger revenues arising from the pick up in economic activity, as well as continued improvements in tax administration and the tax amnesty program which relaxed interest and penalties on payments of outstanding taxes. In addition, expenditure grew at a weaker pace due to slower capital spending as a result of capacity issues in both the public and private sector. In 2019, the fiscal stance is projected to be appropriately expansionary, at 5 percent of GDP, driven by significant need for infrastructure development and capacity building ahead of oil production.

Guyana’s medium-term prospects are very favorable. The commencement of oil production in 2020 presents an opportunity to scale-up capital and current spending at a measured pace over the medium term to address infrastructure gaps and human development needs, while attenuating debt sustainability concerns at the same time. The mission welcomes the passage of the Natural Resource Fund (NRF) legislation for managing the country’s natural resource wealth; it underscores the authorities’ commitment to fiscal responsibility. To ensure fiscal responsibility is achieved, the mission recommends complementing the NRF legislation with a fiscal framework that constrains borrowing and achieves a balanced budget in the near- to medium-term. To achieve this target, the annual non-oil deficit should not exceed the expected transfer from the NRF. This would ensure that excessive public expenditure will not lead to debt growing at the same time as the NRF accumulates. It is also necessary to preserve the spirit of the NRF framework, which appropriately aims to save part of the income from oil as net wealth for future generations. The pace of scaling-up public spending needs to be gradual to reduce bottlenecks from absorptive capacity constraints, avoid waste, and minimize macroeconomic distortions related to “Dutch” disease that has often inflicted economies experiencing sizable increases in resource-based income.

The mission supports continued efforts by the authorities to strengthen institutional, governance and management practices, which will also help reduce vulnerability to corruption. It commends the ongoing efforts in modernizing the revenue administration and strengthening the public investment management system. At the same time, the mission reiterates the importance of addressing the weaknesses identified in the 2017 Public Investment Management Assessment. Greater urgency is attached to these reforms ahead of the expected increase in public spending as oil production begins. The mission notes authorities’ intent to move to rigorous project selection and prioritization criteria within the context of the new long-term Green State Development Strategy. The authorities are committed to considering mechanisms to further improve fiscal transparency, including relating to the management of natural resources.

The mission encourages building on recent progress in strengthening transparency and governance. Guyana completed its first Extractive Industries Transparency Initiative (EITI) Report in 2019 and started implementing its recommendations to further enhance transparency in the extractive industry. In addition, the recent re-establishment of the Integrity Commission has resulted in over 50 percent of politically exposed persons (PEPs) and other required officers making declarations within the first year. Ensuring greater compliance over time with the asset declaration regime would underscore the authorities’ support and commitment to the UN convention against corruption. The mission also welcomes the progress made in strengthening public procurement, and encourages the authorities to ensure timely compliance with existing regulations and take further actions to fortify the transparency of the procurement system.

The authorities have indicated their concerns that the absence of a ring-fencing arrangement in the Stabroek Production Sharing Agreement could potentially affect the projected flow of government oil revenues. The rapid appraisal and development of multiple oil fields could affect the timing and amount of profit oil to be shared with the government from a producing oil field by allocating costs from various fields under development to the producing field. The authorities are developing strategies to mitigate such a possibility, including a national oil depletion policy to guide extraction and production and clearer ring-fencing rules for new investments.

The mission recommends that the authorities continually reassess the monetary policy stance to reflect changes in macroeconomic outlook or risks surrounding the outlook. The mission encourages exchange rate flexibility as part of the monetary policy framework, given the expected large and potentially volatile foreign inflows from oil production. It encourages the authorities to consider developing over the medium-term, supported by IMF Technical Assistance, the necessary infrastructure for a suitable monetary policy framework that facilitates economic growth and adjustment to oil price shocks while maintaining price stability.

The financial sector remains stable. The mission supports the authorities’ resolute efforts in implementing 2016 Financial Sector Assessment Program (FSAP) recommendations. Credit to the private sector grew by 4.0 percent in 2018, faster than 2.1 percent in 2017. The banking sector nonperforming loans (NPLs) to total loans ratio have fallen slightly to 11.9 percent as of end- December 2018, from 12.2 percent a year before, but remained high. Staff recommends an Asset Quality Review to examine banks’ credit risks and enhance financial sector stability. Four bills were approved by Parliament in 2018, covering deposit insurance, emergency liquidity assistance, bank resolution, and national payment system. The transition to Basel II regime (with some elements of Basel III) is on track for completion by end-2019. Staff encourages the authorities to implement the remaining FSAP recommendations, including eliminating reduced provisioning requirements for “well-secured” portions of NPLs and raising the minimum capital adequacy requirement to 12 percent.

Commendable progress has been made in strengthening the framework for anti-money laundering and counter terrorism financing, based on the 2017 national risk assessment. Guyana has been officially removed from the European Commission’s Money-Laundering Blacklist in February 2019 and is scheduled to undertake a mutual evaluation by the Caribbean Financial Action Task Force in 2022. The Financial Intelligence Unit (FIU) has been actively examining cases relating to suspicious transactions, money laundering, terrorist financing and criminal proceeds including those of PEPs, and is working towards greater collaboration with other global FIUs.

Structural reforms are needed to support economic diversification, and achieve inclusive and equitable growth. Infrastructure bottlenecks, skilled labor shortages, and weaknesses in electricity supply are major obstacles to growth. Staff supports the authorities’ proposed increase in investments to improve access to roads, electricity, and telecommunication services to enhance economic activities, including the hinterland. Simultaneous investment in upgrading the education system is critical and would enhance skills and employment prospects. To address skills gap and satisfy an expected increase in labor demand, Guyana could adopt more liberal or open immigration policies, including free movement of all categories of workers from other CARICOM countries. Promoting more flexible working arrangements could help increase female labor participation. Further regulatory and administrative reforms—including property rights and insolvency regime and reducing bureaucratic red-tape—would help strengthen competitiveness.

The IMF Executive Board is expected to discuss Guyana’s Article IV consultation in August 2019. The mission expresses its sincere thanks to the authorities and other Guyanese stakeholders for their warm hospitality, cooperation and candor.

GHANA

On an official visit, President Akufo-Addo said Ghana will provide assistance to the Guyana oil and gas industry, following the discoveries of deposits of oil and gas. With the recent discovery by Aker Energy, Ghana is now a significant player in the oil industry, having commenced production of oil in commercial quantities since 2011.

“We should explore promptly the possibility of establishing a joint vehicle to assist in the effective, initial management of oil and gas revenues. .. Ghana is well-equipped to share with you the dos and don’ts in the area, and make available fee-free, quality technical assistance to you. Hopefully, the proper management of the new revenues will help finance the spectacular development of Guyana.”

Since the advent of diplomatic relations in 1979, the two countries have not done much to create the relevant legal framework for the conduct of their bilateral co-operation.

President Akufo-Addo indicated the readiness of Ghana to deepen bilateral co-operation with Guyana in agriculture, energy, trade and tourism. “… on this trip, we have signed an Air Services Agreement, a Visa Waiver Agreement, and a Memorandum of Understanding on Investment, all with the view of strengthening our bilateral relations and establishing a legal framework for doing so.”

Bonds of common geography, history and blood ties, impose the necessity to work together. “Being each other’s keeper means that we look out for each other and ensure that we, descendants from the Mother Continent, never permit ourselves to be subjected to dehumanising conditions… .. we can forge a new, strong partnership for cooperation … for the mutual benefit of our two peoples.”