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Subnational Oil, Gas and Mineral Revenue Management

19 July 2013
Author
Andrew Bauer
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Subnational Oil Gas Mineral Revenue Management (PDF 551 KB)
Topics
Economic diversificationRevenue managementSovereign wealth fundsSubnational governance
Stakeholders
Civil society actorsGovernment officialsParliaments and political parties
Precepts
P2 P7 P8 P9 What are Natural Resource Charter precepts?
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This paper discusses challenges and approaches in managing resource revenues at the subnational level. Subnational resource-rich governments face distinct challenges in managing revenues from volatile, exhaustible resources. These include: unpredictable and discretionary resource revenue transfers between national and subnational governments, which can undermine development planning; resource revenue volatility which can lead to wasteful spending, poor quality investments; over the longer term, the finite nature of oil, gas and mineral revenues can lead to a long period of economic growth followed by a depression; and difficulty in scaling up public investment efficiently when experiencing a revenue windfall.

To address revenue volatility, subnational governments can “smooth” expenditures by delinking revenues from expenditures. When revenues are unexpectedly high, governments can run a surplus, to be saved or used to pay down public debt. When revenues are unexpectedly low, they can draw on those savings or borrow. To prevent long-term booms and busts, governments can also save a portion of resource revenues for future generations, as well as invest in the local economy to generate future growth. Fiscal rules can underpin these policies, constraining government spending decisions and compelling government bodies to adopt a long-term perspective on public finances.

Development planning can help prepare resource-rich regions for life after their oil, gas or minerals have been depleted. Planning helps prevent shortsighted reactions to temporary ebbs and flows in oil or mineral revenues, helps define the role of the resource sector in development, and lays the groundwork for a thriving post-extractive economy.

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  • Topics
    Beneficial ownership
    Civic space
    Commodity prices
    Contract transparency and monitoring
    Coronavirus
    Corruption
    Economic diversification
    Energy transition
    Gender
    Global initiatives
    Legislation and regulation
    Licensing and negotiation
    Mandatory payment disclosure
    Measurement of environmental and social impacts
    Measurement of governance
    Open data
    Revenue management
    Revenue sharing
    Sovereign wealth funds
    State-owned enterprises
    Subnational governance
    Tax policy and revenue collection
  • Approach
    • Stakeholders
    • Natural Resource Charter
    • Regional knowledge hubs
  • Priority
    Countries
    • Colombia
    • Dem. Rep. of Congo
    • Ghana
    • Guinea
    • Mexico
    • Mongolia
    • Nigeria
    • Peru
    • Senegal
    • Tanzania
    • Tunisia
    • Uganda
  • Learning
    • Training
    • Primers
  • Analysis & Tools
    • Publications
    • Tools
    • Economic models
  • About Us
    • What we do
    • NRGI impact
    • Board of Directors
    • Emeritus Board Members
    • Advisory Council
    • Leadership team
    • Experts and staff
    • Careers and opportunities
    • Grant-making
    • Financials
    • Privacy policy
    • Contact us
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  • Blog
  • Events
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