Norway has shown an excellent track record in the management of their sovereign wealth fund (SWF) over the decades with its current value at over US$1 Trillion, which is equivalent to three times their annual GDP. They have taken their oil wealth and invested in companies that are environmentally responsible while also positively influencing how companies do business. The performance of the fund has also been credited to its mix of assets and investment posture.
The planned SWF of Guyana should benchmark the Norwegian Fund and establish clear investment guidelines and targets that will allow for growth beyond the current low interest rates being received, while maintaining the appropriate low risk profile. Norway earned a return on investment close to 20% last year and has high equity investment exposure. For Guyana that risk level may be too high, but the underlying approach is worth serious consideration. Investing in the green technology of the future and environmentally responsible companies are good values to use in guiding our investment posture. Investors of today place more value on social responsibility and these companies tend to outperform and outlive their rivals.
The governance structure of the Norwegian SWF should also be a part of the benchmarking process and providing similar levels of transparency in portfolio strategy and performance are essential in today’s divided political environment. More importantly, Parliament should establish a bipartisan finance committee that will outline the guiding principles that will establish the investment strategy, the required transparency and auditing structure for the governance of our SWF. The linkage to annual budget requirements is also a part of the fund’s governance structure.
Given the current high levels of distrust and lack of cooperation between the major political parties, accomplishing this will be challenging in the coming months, but we must all keep in mind that while the infighting continues money is not being made at the level needed to cover the increasing national debt. A path towards improved cooperation in Parliament must be put forth.
The Cooperative Republicans of Guyana