The weaker price outlook has plunged potential investments in Tanzania’s promising offshore gas sector into uncertainty, and reduced the likelihood that gas will have a major impact on Tanzanians’ well-being. This revised outlook also impacts important policy decisions the government must make about the management of public finances.
Income from oil provides Timor-Leste with an opportunity to pursue development orientated goals. This case study describes the Timor-Leste Petroleum Fund (PF) and how it sought to generate income for current and future generations. The PF is highly ranked among sovereign wealth funds especially for a new, post-conflict country and has successfully accumulated large savings, however as this study suggests there are shortcomings which could provide lessons for other countries.
Oil-rich Azerbaijan has failed to avoid the risks associated with oil producing countries. Revenues are accumulated in a national oil fund, set up in 1999 to effectively manage the country’s oil wealth. Despite its transparency, the fund lacks accountability. The main risk is the government’s spending, which is too high and of poor quality. With oil and gas revenue expected to decline in 2015, the government will be hard pressed to finance its current expenditure and achieve sustainability in the future.
An explicit financial rule dictating the amounts spent and saved each year by government can guide the long-term decision to save.” – Natural Resource Charter, Precept 7 “One strategy to address revenue volatility is to form a fund with surplus revenues to accumulate foreign assets in boom times, an
Oil, gas and mineral resources are distinctly different from other sources of government income. Only through good macroeconomic policy and public financial management can a country take full advantage of natural resources.
Parliamentarians have a crucial role to play in reviewing legislation on oil, gas and minerals, and in overseeing the government’s management of these extractive sectors. In support of this unique mandate, NRGI has developed five parliamentary briefings that constitute an approach to parliamentary capacity building on extractives.