Syndicate content

resource-rich

How to manage revenues from extractives? There’s a book for that!

Rolando Ossowski's picture
 
Offshore oil and rig platform. Photo: © curraheeshutter / Shutterstock.


Countries with large nonrenewable resources can benefit significantly from them, but reliance on revenues from these sources poses major challenges for policy makers. If you are a senior ministry of finance official in a resource-rich country, what are the challenges that you would face and how can you strengthen the fiscal management of your country’s oil and mineral revenues? Consider some of the issues that you would likely encounter:

For many resource abundant countries, large and unpredictable fluctuations in fiscal revenues are a fact of life. Resource revenues are highly volatile and subject to uncertainty. Fiscal policies will need to be framed to support macroeconomic stability and sustainable growth, while sensibly managing fiscal risks. Also, there is a question of how to decouple public spending (which should be relatively stable) from the short-run volatility of resource prices.