Guyana’s Central Bank reported today via its first quarterly report for 2023 that the Natural Resource Fund (NRF) saw inflows amounting to G$45.7B (US$219.45 million) comprising of profit oil – G$33.7B (US$161.86 million) and royalties – G$12B (US$57.59 million).
The operational manager for the fund said lower levels of profit oil and royalties were recorded for this quarter in comparison to G$105.8B (US$507.64 million) and G$13.9B (US$66.95 million) respectively for the previous quarter.
These funds were deposited into the Natural Resource Fund account held at the Federal Reserve Bank of New York. Since its inception, the Fund has accounted for G$408.9B (US$1,961.25 million) from 24 lifts of profit oil and G$57.9B (US$277.66 million) from royalties.
Over the quarter, Bank of Guyana said the Federal Reserve increased its interest rates target range twice, moving it from 4.25% – 4.5% to 4.5% – 4.75% and then to 4.75% – 5%. As a result of these increases which caused interest rates on overnight deposits to rise, and a higher account balance, the Fund continued to earn a higher level of interest income on its overnight deposits than previous quarters. The Fund earned some G$3.3B (US$15.66 million) in interest income over the quarter compared to G$2.3B (US$11.30 million) in the previous quarter.
During the quarter, transfers to the Government of Guyana’s Consolidated Fund account amounted to G$41,700 million (US$200 million). This amount represents 19.96% of the estimated amount budgeted to be withdrawn in 2023 – G$208.9B (US$1,002 million).
Additionally, Central Bank said the Fund recorded a profit of G$3.3B (US$15.66 million) this quarter in comparison with $2,356.73 million (US$11.30 million) for the preceding quarter solely due to interest earned on deposits. This resulted in a return1 of 1.059% for the quarter compared with 0.863% in the previous quarter. The Fund earned an annualized return of 0.824% since its inception.
During the quarter as well, Central Bank said a formal Investment Mandate was established for the Fund following discussions between the Board of Directors and the Bank of Guyana. It was mandated that the funds be maintained in the deposit account held at the Federal Reserve Bank of New York earning overnight deposit interest at the prevailing federal funds rate. It was also agreed that the Bank of Guyana will continue to monitor overnight interest rates and inform the Chairman of any changes to consider adopting a ladder approach investment strategy.
The Natural Resource Fund was formed by the enactment of the Natural Resource Fund Act 2019 which was passed in the National Assembly on January 3, 2019 and assented to by the President on January 23, 2019. This act was subsequently replaced with the Natural Resource Fund Act 2021 which was passed in the National Assembly on December 29, 2021 and assented to by the President on December 30, 2021.
The Act gives the Bank of Guyana the responsibility for the operational management of the Fund.
